Nod to raise fixed cost of urea by Rs350 a tonne1 min read . Updated: 30 Jan 2014, 03:52 PM IST
Ministerial panel approves an increase in the fixed cost of urea, pushing up the government's subsidy Bill
New Delhi: A ministerial panel on Thursday approved an increase in the fixed cost of urea by Rs350 a tonne, yielding to a long-sought industry demand but steeply pushing up the government’s subsidy Bill.
The approval came from a group of ministers headed by agriculture minister Sharad Pawar.
Fertiliser minister Srikant Kumar Jena said the government’s fertilizer subsidy outgo will increase by about Rs900 crore.
The government’s outlay on fertilizer subsidy in the current fiscal year is expected to be more than Rs1 trillion.
The fixed cost of urea has remained unchanged since 2002-03. For a urea plant, the fixed cost mainly comprises establishment cost, annual maintenance cost, working capital, salaries and interest.
Urea manufacturers welcomed the government’s decision. “This will be beneficial for the industry," said a spokesperson of Chambal Fertilisers and Chemicals Ltd.
“Although the industry demanded a hike of Rs700 per tonne, we are happy with this 50% relief and look forward for further reforms," said Satish Chander, director general of Fertilizer Association of India, a fertilizer industry lobby that has been urging the ministry to raise the fixed cost.
PTI contributed to the story.