New Delhi, Nov 14 (UNI) Minister for Chemicals and Fertilisers Ram Vilas Paswan today said the government was planning to give fertiliser subsidy based on nutrients to weed out inefficient producers and bring down the quantum of subsidy bill touching Rs 50,000 crores.
This will also enable better maintenance of the soil quality which has deteriorated with unbalanced use of fertilisers.
Addressing the Economic Editors conference here, Mr Paswan said the new scheme will give freedom to the farmers to choose a better product required for their soil.
As a result of this, the fertiliser subsidy bill will increase by around Rs 1,200 crores in the short run. However, in the long run the total subsidy will come down as the farmers shift from traditional fertilisers to new products.
The Minister said the government will issue bonds to the industry for financing fertiliser subsidy bill. The modalities will be worked out after discussions with various stake holders.
At present subsidy is given to fertiliser units manufacturing Urea, DAP, MOP and SSP.
Mr Paswan said in spite of increase in cost of fertilisers, the government has kept the farmers insulated from this increase in cost and have increased the subsidy allocations to meet the cosumption needs. The subsidy on fertilisers has increased sharply over the last few years.
While in 2005-06 the net incidence of the subsidy was of the order of Rs 20,841 crore, it went upto Rs 28,826 crore in 2006-07 and is expected to be Rs 39,191 crore in 2007-08.
Mr Paswan said it is estmated that 88 per cent of the increase in subsidy is due to sharp increase in international prices of fertiliser inputs and finished fertilisers.
The Minister said efforts were being made to increase domestic production of fertilisers and to improve availability of major fertilisers in the country.
While domestic urea production has increased by 8.4 per cent in 2006-07 over 2002-03, DAP production has decreased by 7.35 per cent during the same period. Last year, urea production was 203.08 lakh tonnes and DAP production stood at 48.51 lakh tonnes.
The consumption of fertilisers grew by hefty 53.61 per cent with the figure being 74.64 lakh tonnes in 2006-07.