India takes step towards nutrient based fertiliser subsidy

CHENNAI - Despite strong reservations expressed by the DMK, an important ally of the Congress-led central government, the union cabinet Thursday approved migration towards Nutrient Based Subsidy (NBS) for fertilisers.

The cabinet decided to form an inter ministerial committee (IMC) to finalise the per nutrient subsidy while increasing the maximum retail price of urea to Rs.5,310 per tonne from the current Rs.4,830 per tonne.

Approving the implementation of NBS on decontrolled phosphatic and potassic fertiliser with effect from April 1, 2010 the cabinet decided to fix the subsidy on nutrients - Nitrogen (N), Phosphorus (P) Potash (K) and Sulphur (S) contents for the year 2010-11.

In addition to the fixed subsidy on above mentioned nutrients, there will be an additional per tonne subsidy for subsidised fertiliser carrying other secondary nutrients and micro nutrients in formulations approved under FCO 1985.

On Tuesday, Tamil Nadu Chief Minister M. Karunanidhi called for political consensus on the issue of nutrient based subsidy (NBS) for fertilisers.

“I am also of the view that we need to build a political consensus on this scheme before taking any decision as this scheme would affect a large section of our society,” he said in a letter to Prime Minister Manmohan Singh, Congress president Sonia Gandhi and Finance Minister Pranab Mukherjee.

“It would also be desirable to have views on this new scheme from select state governments with strong agricultural background,” he said in the letter.

Earlier Karunanidhi’s son and Minister for Chemicals and Fertilisers M.K. Alagiri had written to Mukherjee against NBS as well as increasing the price of urea as it would affect small farmers.

Alagiri had wanted both the proposals to be kept on hold for a year.

Reacting to the cabinet’s decision, P. Nagarajan, chief financial officer, Coromandel International Ltd, told IANS over phone from Hyderabad: “This is only a policy announcement by the government. The final contours of the NBS will be decided by the inter ministerial committee.”

The NBS regime is expected to promote balanced fertilisation and consequently increase agriculture productivity in the country through higher usage of secondary and micro nutrients.

It is also expected that new innovative fertiliser products would be developed subsequently under the NBS regime to meet the different requirements of Indian agriculture while showing the actual demand for fertiliser.

According to the government, the unshackling of fertiliser may also attract fresh investments into the sector.

The fertiliser manufacturers have assured the government that the price line of decontrolled fertilisers will be maintained at the current levels during the 2010 kharif season.

The government will also make necessary interventions to keep the price line on a tight leash.

However the NBS will not have any impact on the organic manure sector which at present is outside the subsidy regime.

–Indo Asian News Service