India introduces new fertilizer subsidy

12 June 2008 20:13  [Source: ICIS news]

NEW DELHI (ICIS news)--India announced on Thursday a nutrient-based fertilizer subsidy plan to reduce prices of complex fertilizers containing nitrogen, phosphate and potash.

The Cabinet Committee on Economic Affairs (CCEA) also approved a uniform freight subsidy scheme for all fertilizers to ensure easy availability of products in all parts of the country.

“The nutrient-based pricing will lead to parity in price of complex fertilizers with straight fertilizers [those containing a single nutrient],” the government said. The plan would promote a balanced use of nutrients by farmers, it added.

Under the current subsidy programme, the government gives different subsidy rates on different fertilizers.

However, the current programme, lead to nutrient pricing differentials that encouraged farmers to use higher volumes of fertilizers that is cheaper to use in terms of nutrients.

The price of nutrients in complex fertilizers at present is higher than the price of same nutrient in straight fertilizers such as urea and dual-nutrient products such as di-ammonium phosphate (DAP).

“This led to comparatively higher usage of straight fertilizers [single nutrient products] vis-à-vis complex fertilizers which are agronomically better fertilizer products,” according to a government statement.

The CCEA decided to fix the farm-gate prices (FGPs) of nutrients in complex fertilizers at the level of their existing price in straight fertilizers. The FGP of each nutrient will be uniform across all subsidised fertilizers. The government will determine the retail price of fertilizers on the basis of nutrient content.

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By: Naresh Minocha
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