Government may increase the price of Urea by 10 percent due to the increase in minimum support price for kharif corps. The Cabinet Committee on Economic Affairs (CCEA) will meet Thursday to take a decision on raising prices of urea, according BL report.
With the increase in urea prices, the Government aims to cut up to Rs 2,000 crore on the total subsidy outgo on urea. The last update in urea prices happened in 2010 was Rs 5,310/tonne from Rs 4,830.
The implementation of the proposal, modified New Pricing Scheme-III, is likely to be approved for a period of three years or till such time all the non-gas based urea units get converted to gas, which ever is earlier, quoting a top official source familiar with the development, a BL report said. He also added that the Government may also take in to consideration the Nutrient Based Subsidy (NBS) for urea. However, this should be done after taking into account the situation vis-à-vis production, supply and price in international markets. Nutrient Based Subsidy is being used for all other types of fertilisers, the source said.
Through the hike in price the Government also aims to give some relief to the companies for the rise in the fixed cost. However at the same time the Government does not want financial sickness to attack operational plants.
Plan Panel Not For Hike
Meanwhile, the Planning Commission protests against price hike proposal. Instead it wants NBS to be brought for urea, an official said. But this was ended by the Department of Agriculture and Cooperation and the Department of Fertiliser. The Department of Agriculture and Cooperation debated that NBS has not generated desired results in bringing down the price or improving the availability of fertilisers to the farmers, he added. At the same time, the Department of Expenditure in the Finance Ministry supported the policy of modified NPS-III.
The Department of Expenditure also suggested that the New Investment Policy for Urea be revised. At the same time, a time-bound plan for conversion of non-gas based urea units should be put in place which helps to reduce the subsidy burden. Once the difference between the price of homegrown and imported urea is reduced significantly, a proposal to bring urea under NBS can be considered, he added to the report.