New Delhi: The government on Monday sought to shift to a nutrient-based subsidy regime to facilitate balanced use of fertlizers and bring in fresh investment to the sector.
Presenting the budget 2009-10, finance minister Pranab Mukherjee said, “To ensure balanced applications of fertlizers, the government intends to move towards a nutrient-based subsidy regime instead of the current product pricing regime.”
The move will result in the supply of “innovative fertlizer products in the market at reasonable prices”, the finance minister observed.
The unshackling of the fertlizer manufacturing sector is expected to attract fresh investment to the segment that has not witnessed any significant inflow of funds, Mukherjee said.
At present, the government controls the pricing of key fertlizers and offers funds to companies as fertlizer subsidy to compensate them for selling key farm nutrients at the rates determined by it.
Moreover, the government aims to provide subsidy directly to farmers instead of companies that sell them.
“In due course, it is also intended to move to a system of direct transfer of subsidy to the farmers,” Mukherjee said.
The country’s fertlizer subsidy bill surged to a record Rs1,17,000 crore (Rs1 ,170 billion) in 2008-09 from only Rs45,659 crore (Rs456.59 billion) the previous fiscal, due to unprecedented rise in the prices of farm nutrients in the initial part of the last fiscal.
According to an official estimate, fertlizer companies recover less than 15% of the actual cost of farm nutrients by selling at MRPs, while the rest is borne by the government through the subsidy bill.