A Group of Ministers (GoM) has cleared a 10 per cent increase in the maximum retail price of urea along with bringing the fertiliser under the Nutrient Based Subsidy (NBS) regime.

The approval, which will have to be endorsed by the Union Cabinet, would result in the MRP of urea going up from Rs 5,364.69 to Rs 5,901.16 a tonne (inclusive of the 1.03 per cent excise-cum-education cess levied in the latest Union Budget).

The GoM, which met here today, also gave the go-ahead for bringing urea under NBS (all other fertilisers are already covered under the regime), according to informed sources.

This would entail all urea units getting gas at a notional weighted average pooled price – so as to set off their relative advantage/disadvantage from lower/higher feedstock costs – and freeing the MRP charged to farmers.

Companies would initially be given the freedom to raise the MRP by 10 per cent, which, the sources claimed, had become unavoidable in the context of spiralling subsidies as well as substantial price increases in other fertilisers.

Since March 31, 2010 – when prices of non-urea fertilisers were decontrolled – the MRP of di-ammonium phosphate has risen from Rs 9,350 to Rs 12,000 a tonne (28.3 per cent) and that of muriate of potash from Rs 4,455 to Rs 6,300 a tonne (41.4 per cent).

As against this, the MRP of urea has gone up by only 11.1 per cent – from Rs 4,830 to Rs 5,364.69 – worsening the nutrient imbalance already excessively tilted in favour of nitrogen.

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