Indian government cuts subsidy on fertilizers by 15 percent

Government hopeful of reduction in wholesale prices of Di-ammonium phosphate (DAP) and Muriate of Potash (MoP) by Rs 1,500 and Rs 1,000 per tonne on account of falling global prices

New Delhi/May 1
Keeping in view the falling global prices of fertilizers, Indian government has decided to cut subsidy on phosphatic and potassic fertilizers by 15 percent after Union Cabinet’s go ahead to Nutrient Based Subsidy Policy (NBS) for the P&K fertilizers here today.
After a Union Cabinet meeting that was held here today, Indian government decided to implement Nutrient Based Subsidy Policy for the P&K fertilizers and has decided to cut subsidy by 15 percent on account of falling global prices of fertilizers.
“Under the NBS policy applicable to fertilizers other than Urea, while the government decides a fixed subsidy on each grade of fertilizers covered by the policy, the importers and manufacturers decide the domestic prices of these fertilizers. They are allowed to fix the minimum retail price (MRP) at reasonable level,” an Indian government spokesperson said, adding that the Government of India will announce NBS rates for various nutrients including Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S) for P&K fertilizers covered under the policy every year.
“The implementation of new rates will result in reduction of subsidy by about 15 percent. The price of DAP and MOP is expected to be reduced by a minimum of Rs.1500 and Rs.1000 per MT, respectively from the current level which will provide relief to the farmers,” said the government spokesperson.
The cabinet observed that the falling international fertilizers prices didn’t have corresponding decrease in domestic prices. “The cabinet has decided that it shall henceforth be mandatory for all fertilizer companies to submit certified cost data while claiming subsidy. In case MRP is not found to be reasonable, subsidy may be restricted or denied,” the spokesperson said.
As the domestic demand of P&K fertilizers is largely met through import of finished fertilizers and raw materials, the cabinet decided that domestic prices of fertilizers should move on tandem with international prices. But if someone is found guilty of abuse of subsidy mechanism, Indian government may exclude any grade/grades for fertilizers of a particular company or the fertilizer company itself from the NBS Scheme.
The Cabinet has also decided that the reasonability of MRP of P&K fertilizers fixed by the companies in the year 2012-13 shall also be looked into by the government for the recovery of subsidy.