Govt cuts subsidy on key fertilisers; no impact on farmers

New Delhi, Mar 1: The government on Thursday announced up to 33 per cent cut in the subsidy rates of decontrolled fertilisers such as DAP and MOP for 2012-13, a decision which will help the exchequer save about Rs 10,000 crore without hurting farmers.

The decision was taken by the Union Cabinet in the backdrop of about 20 per cent decline in the global prices of these nutrients, which are mostly imported. The subsidy is reimbursed to the fertiliser firms based on the import parity prices.

"Total subsidy outgo for the phosphatic and potassic (P&K) fertilisers for the financial year 2012-13 would be reduced by more than 20 per cent," an official statement said. However, the move would not affect the maximum retail price (MRP) of these fertilisers, the industry said.

"We are satisfied with the decision. Subsidy is the prerogative of the government. The reduction in subsidy will not lead to any increase in the retail prices. Farmers will not be affected and we will ensure adequate availability.."

Director General of the Fertiliser Association of India (FAI) Satish Chander said. The government, which is hard-pressed for fiscal resources, would be giving about Rs 65,000 crore fertiliser sops to farmers.

Of this, Rs 52,000 crore would be accounted for the the P&K group of the soil nutrients. As per the new rates, the subsidy on Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S) for 2012-13 fiscal would be brought down to Rs 24, Rs 21.80, Rs 24 and Rs 1.67, respectively.

For this fiscal, the subsidy rate of N, P and K is Rs 27.15/kg, Rs 32.33/kg and Rs 26.76/kg, respectively. Accordingly, the subsidy on Di-Ammonium Phosphate (DAP) and Muriate of Potash (MOP) would be Rs 14,350/tonnes and Rs 14,440/tonnes, respectively.

PTI