While the Budget apportioned nearly Rs 73,000 crore toward fertiliser subsidies, industry players were disappointed with the lack of urgency displayed by the government with regard to raising urea prices, clearing outstanding subsidy payments while also reducing subsidy allocation for non-urea fertilisers this fiscal.
“This Budget is disappointing, the Budget estimate for non-urea fertilisers has fallen by over Rs 2,000 crore since last fiscal’s estimate. Subsidies will only continue to rise and reducing the fiscal deficit to 3.9 per cent is not possible,” said Satish Chander, Director General, Fertiliser Association of India.
As per the Expenditure Budget 2015-16, Budget estimates for imported urea, indigenous urea and decontrolled NP/NPK fertilisers stood at Rs 12,300 crore, Rs 38,200 crore and Rs 22,468.56 crore respectively. While the amount for NP/NPK fertiliser is pegged higher than the 2014-15 in the Revised estimate (Rs 20,667.30), it is lower than that fiscal’s Budget estimate of Rs 24,670.30 crore.
“Non-urea fertiliser subsidy allocation fell between the two Budget estimates and the government merely shifted around Rs 2,000 crore to urea. Even these payments, amounting to nearly Rs 40,000 crore have not been made since July. They are just playing a political game,” said Chander, adding that soil health cards will be meaningless if pricing policies are not corrected.
The price of urea is fixed by the government at Rs 5,360/tonne, far lower than phosphatic and potassic complexes, such as diammonium phosphate (DAP) and muriate of potash (MoP) that are priced between Rs 22,000-24,000/tonne and Rs 16,000/tonne, respectively. The cheaper urea cost has led to disproportionate usage at the cost of soil health.
A senior industry source said the Centre should have raised the price of urea since talk of decontrolling the sector had been shelved. “They could have raised the price by at least 10 per cent. Already, farmers pay a premium of 20 per cent since urea cost is so low which causes tight availability,” he said.
Asked for reasons why the 2015-16 Budget estimate for NP/NPK fertilisers and the 2014-15 revised estimate was about Rs 1,800 crore higher, he attributed it to the foreign exchange rate. “There are no changes in retail rates, so I think it’s possibly due to the foreign exchange rate being taken into account,” he said.
Most fertiliser stocks traded marginally higher on the BSE on Saturday.