Centre to Consider Fixing Nutrient-based Subsidy Rate for Urea

Government is planning to fix a nutrient-based subsidy or NBS price for urea to endorse balanced use of fertiliser and lift up efficiency in the industry, sources said.

In the year 2010, the Center had launched the NBS programme under which a fixed amount of subsidy, decided on a yearly basis, is offered on every grade of subsidised phosphatic & potassic (P&K) fertilizers, excluding urea, based on the nutrient content present in them.

A highly placed source told news agency PTI that “We have already introduced the NBS for P&K fertilisers. But in case of urea, due to implementation concerns, it had not been implemented so far. The new government could consider implementing it”.

The source added that the fertiliser ministry is mulling over fixing a NBS rate for urea too. The modalities are under discussion. Fixing NBS price for urea will promote balanced use of urea & bring in efficiency in the fertiliser industry by instilling bit of competition.

At present, urea is the only controlled fertilizer & is sold at a statutory notified uniform sale cost. Its maximum retail price is also fixed at Rs 5,360 / tonne. Urea is the most commonly used fertiliser as it is highly subsidised.

As per sources, the rate of NBS for urea had not been fixed till now because of certain apprehensions that the present officials in the ministry feel can be resolved easily. They said, “The NBS can be set without removing urea from the Fertiliser Control order. Within the broad control parameters, you can have the flexibility to alter to the market situation. It is possible to fix a NBS price for urea”.

On apprehension that urea rates will rise if it is decontrolled like P&K fertilisers, sources told, in such case, the Centre will not completely decontrol & will keep the price band in a range depending upon the market condition. The price band can be revised occasionally.

On concern that low-priced urea imports could hit domestic PSUs, they said, this can be tackled by maintaining the channelized imports by keeping control over quantity of shipments to make sure that cheaper soil nutrient is not discarded in the country.

Regarding easy availability of urea across India, sources told this can be addressed by preserving movement control under the essential commodities act. They also said, “In P&K, we have retained 20% of movement control. Here we can have 40 % movement control”.

In the year 2018-19, India had manufactured over 240 lakh tonnes of urea & imported 69 lakh tonnes to meet up the domestic need.