CCEA approves nutrient-based pricing of subsidised fertilisers

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New Delhi, Jun 12 (UNI) In a bid to promote balanced use of fertilisers and to cater to the interests of farmers, the Cabinet Committee on Economic Affairs (CCEA) today approved a nutrient-based pricing regime for all subsidised fertilisers.

This move is expected to reduce prices of complex fertilisers by Rs 1,416 per tonne.

The CCEA also decided to fix the farm gate price of nutrients at the existing level in straight fertilisers, that is, urea, DAP, MOP and SSP resulting in a significant cut in prevailing maximum retail prices (MRPs) of complex fertilisers.

Briefing newspersons on the outcome of the CCEA decisions, Finance Minister P Chidambaram said under this regime, the farm gate price of each nutrient will be uniform across all subsidised fertilisers.

The selling price of subsidised fertilisers will be based on the nutrients contained in the fertiliser.

Mr Chidambaram assured that there would be no shortage of the nutrients in the country.

The CCEA also approved a uniform freight subsidy regime for fertilisers.

''The new pricing scheme for fertilisers will help lower prices of some varieties by an average Rs 1,416 per tonne,'' Mr Chidambaram said.

Companies sell fertilisers at government-set prices, and are subsidised by it for the shortfall arising due to the cap on prices.

Mr Chidambaram said the new nutrient-based pricing policy is aimed at lowering prices and providing adequate supplies to farmers.

He said over-dependency of farmers on a particular variety of fertiliser will come down.

Prices of other fertilisers like urea would not change, Mr Chidambaram added.

The uniform subsidy regime will facilitate uniform availability of fertilisers, Mr Chidambaram said.

As per the existing pricing regime, the price of nutrients in complex fertilisers are higher than the price of same nutrient in straight fertilisers like urea, DAP, MOP and SSP. This led to comparatively higher usage of straight fertilisers vis-a-vis complex fertilisers which are agronomically better fertiliser products. Besides, leading to parity in price between complex and straight fertilisers, it is expected to promote balanced fertilisation by encouraging usage of complex fertilisers.

The new policy is to be implemented with effect from April 1, 2008.

To ensure easy availability of fertilisers in all parts of the country, the CCEA approved the uniform freight subsidy regime for all subsidised fertilisers, wherein freight subsidy will be paid separately on receipts of all subsidised fertilisers in the districts/blocks.

The freight subsidy will constitute of two components, namely, rail freight and road freight. The rail freight will be paid on actual, and the road freight will be paid on a normative average district lead (average of the actual leads of block headquarters from the nearest rail rake point) and a normative per KM rate.

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