New Delhi: The government may end up losing as much as Rs 400 crore, paid as a fertilizer subsidy, if a certain category of imported fertilizer remains unsold till 31 March.
File Photo
The case relates to the import of triple superphosphate (TSP), which was notified last year for import and sale till 31 March this year to make up for shortages in the availability of another key fertilizer—diammonium phosphate (DAP).
Two government ministry officials independently said at least 250,000 tonnes of TSP has been imported since November. Most of this has failed to find demand with the farmer.
Both officials, who declined to be identified, said TSP can be sold legally only up to 31 March and the government is unlikely to extend this date. “Any sale of TSP after this date would be illegal,” one of them said.
The government had extended a Rs 16,000 per tonne subsidy on TSP, which translates into a subsidy payout of Rs 400 crore for the imported 250,000 tonnes. Even after this, TSP was being sold in the market by various companies at a maximum Rs 17,000 a tonne.
DAP is selling at Rs 18,000-19,000 a tonne.
Officials say that despite being cheaper than DAP, TSP has found few takers since it lacks nitrogen content, which is crucial to soil and crop health.
Sudhir Panwar, a professor of Lucknow University and an expert on farm issues, agrees. “Frankly, besides the lack of nitrogen content, the average farmer does not see TSP as a replacement for DAP. Moreover, TSP is largely unusable along with urea,” he said. “Also, companies selling TSP failed to market it well.”
Urea, the largest selling fertilizer, is typically used in conjunction with DAP.
Officials admitted that the government was at a loss to reconcile the situation and make up for the loss incurred on account of the payout. “The inventory is lying unused and is in danger of being spoilt,” said the second government official.
Tarun Surana, an analyst with Mumbai-based Sunidhi Securities and Finance, however, said fertilizer inventories typically stay good for up to a year, and there was no danger of imported TSP getting spoilt.
***Govt set to further reduce subsidy on non-urea fertilizers
The government is set to further reduce the subsidy it extends to non-urea fertilizers on account of the appreciating rupee.
This reduction, when it comes, will be on top of a 17 January decision to set the per-tonne subsidy on diammonium phosphate (DAP) and muriate of potash (MoP) at Rs 15,000 each.
This constituted a reduction on subsidy by Rs 4,763 on DAP and Rs 1,054 on MoP. An official with the direct knowledge of the matter said that after the second reduction, the subsidy on DAP will stand at Rs 14,350 per tonne and at Rs 14,400 per tonne for MoP.
Another official said the reduction was to reflect the recent uptrend in the value of the rupee vis-a-vis the dollar. The rupee, which had seen a steep fall in the second half of 2011, has bounced back since. Since most non-urea fertilizers are imported, the subsidy offered becomes a function of the prevailing exchange rate. Subsidy rates for fertilizers other than DAP and MoP are being worked out.
aman.m@livemint.com