Centre planning to introduce measures to bring down fertiliser subsidy

Centre's focus is to bring down the cost of gas which is a key component for production of urea. Information from official sources indicated that bids, some of which stood at more than $30

The government is planning to take steps towards bringing the cost of fertiliser subsidy down. According to a report by The Economic Times (ET), it is looking for measures to bring about greater efficiency in the system.

 

The Centre's focus is to bring down the cost of gas, which is a key component for urea production. Official sources indicated that bids, some of which stood at more than $30 a unit earlier, have now come down to a low of around $18. "There is a signal that the companies that bid for the contracts have realised that we are serious about ensuring that our plants get supplies at competitive prices", said an official familiar with the process, the report said.

 

Both the finance and fertiliser ministries see the prices as a major challenge. The report said even the public sector enterprises such as GAIL were found to be uncompetitive in the process, and their quoted prices for the contracts were amongst the highest.

 

The news comes at a time when the government is dealing with the challenge presented by high international prices, pushing up the Centre's subsidy bill for fertilisers, a critical farm input. Although the allotted budget for fertiliser subsidies has come down from Rs 2.25 trillion this year to Rs 1.75 trillion next year, the burden is still significant on the exchequer.

 

The government is planning to prepare the land holding details of the farmers and accordingly fix the quota for fertilisers. Based on the allocation, each farmer will be entitled to get the quota at a subsidised rate, while anything beyond the quota will be provided at market rates. "The amount of fertiliser being used is unlikely to reduce, but the nutrient balance will be better", argued an official, as quoted by ET in its report.

 

Karnataka, Assam, and Maharashtra are states that have come forward to run pilots in one district each. However, officials related to the matter accept that more groundwork is required to ensure that the data in the test runs don't have any flaws so that no one is excluded from the process, the report added.