The Finance Ministry may provide Rs 60,000-62,000 crore for fertiliser subsidies in Budget 2012-13. This is even as the Government is set to rollout the first phase of direct cash subsidy for fertiliser in a few days.
“The revised estimate for fertiliser subsidy during 2011-12 is expected to touch Rs 62,000 crore. Usually, the Budget Estimate for the following year is at par with the Revised Estimate of the previous year.
A senior Government official, however, said that subsidy requirement for fertiliser would touch Rs 85,000-Rs 90,000 crore during current year. “But part of this excess can be met through saving while remaining can be sought in the Budget,” he said adding that this may not be easy. So, it can be said that the provision for 2012-13 could be around Rs 60,000-62,000 crore,” a person close to the development said.
At present, the fertiliser market comprises two key product types — urea and NPK (nitrogen-phosphorous-potash) — produced, imported and sold in 23 different grades.
While urea makes up half the market, the other complex fertilisers account for the rest.
For NPK, there is nutrient-based subsidy, where the retail price is fixed by the producer. For urea, the Government sets the retail price and pays the difference between the cost and retail price as subsidy.
Rising prices, consumption
Till last December, nutrient prices in the international market and cost price (produced in the country and imported) were rising. This necessitated more subsidies. Hence, the Government provided an additional Rs 13,778.93 crore through the supplementary demand for grants, which took the total fertiliser subsidy to over Rs 63,000 crore.
“Now, international prices are down. But keeping the consumption and average price trend in mind, the plan is to provide subsidy of around Rs 60,000-62,000 crore in the next Budget,” he said. However, the Finance Minister will take a final call, he added.
Meanwhile, the Government intends to rollout the first phase of direct cash subsidy for fertiliser. The Finance Minister, in last year's Budget, had said: “The system will be in place by March 2012.”
Direct Cash Subsidy
The first phase involves mapping of the nearly three lakh retailers. However, there is no clarity on how many have been mapped. A senior Government official claimed that nearly half the retailers had been registered, while another said the number was just 40,000.
The first phase will ensure tracking of dispatch and sales through SMS. The retailer will inform how much stock he has received, sold and what is left. This will be relayed to a centralised information system that will keep the Government informed about supply and consumption.
After the first phase, the subsidy will be given to retailers in the second phase and, finally, to the farmers in the third phase.