Govt to raise fert subsidy to protect farmers from high prices

New Delhi, Feb 15 (PTI) Faced with high food inflation,the government today decided to increase fertiliser subsidy toabsorb high global prices so that the domestic price of urea,Di-ammonium phosphate (DAP)and muriate of potash (MOP) areprotected.

The group of ministers, headed by Finance Minister PranabMukherjee, today met to review the fertiliser prices.

"The subsidy level will be increased so as to maintainthe affordable prices. We are working out the details,"Fertiliser Secretary Sutanu Behuria told reporters here.

"Given the global prices have risen, MRP should bemaintained at a reasonable level. The government will absorbthe burden of rise in global prices by way of subsidising," headded.

The price of DAP in the global market is around USD 630per tonne and MOP at USD 400-420 per tonne, but the benchmarkprice at which the government reimburses subsidy to fertilisercompanies are USD 450 a tonne and USD 350 a tonne,respectively.

It is feared that inflation, already hight at 8.23 percent in January, will move up as higher fertiliser priceswould increase cost of production of food items.

"We have discussed how the benchmarking of the priceshould be done so that fertilisers are made available atcomfortable price for the Kharif season," Behuria said.

Fertilsier subsidy stood at over Rs 64,000 crore in2009-10.

Fertiliser subsidy is the difference between thenormative delivered cost of fertilisers and their notifiedselling prices. Subsidy is given to fertiliser manufacturers.