Govt may cut potash subsidy, raise it for phosphatic fertiliser

New Delhi: The Centre is considering slashing subsidy of potassic fertilisers and raising the same for phosphatic and sulphur in line with global prices for the next fiscal.

At present, the subsidy on nitrogen (N) is fixed at Rs 15.85 per kg, Rs 13.24 per kg for phosphorous (P), Rs 15.47 per kg for potash (K) and Rs 2.04 per kg for sulphur (S).

According to sources, the Fertiliser Ministry has prepared a draft cabinet note on Nutrient-Based Subsidy (NBS) rates for P&K fertilisers for the 2017-18 fiscal. The ministry has proposed reducing potash (K) subsidy for next fiscal from the existing level of Rs 15.47 per kg keeping in view falling global rates.

It has recommended increasing marginally the subsidy of other nutrients to compensate companies from higher global prices and maintain the retail price at the current level, sources said.

However, a final call on the proposal will be taken by the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi. Global prices of Di-ammonium phosphate (DAP) and Urea have gone up in the last few months and are ruling at USD 330 a tonne and USD 260 a tonne, respectively.

In case of Muriate of Potash (MoP), international prices have declined and are presently ruling at USD 227 a tonne. The government is planning to fix the subsidy rate of P&K fertilisers for the entire year instead of bi-annually done in 2016-17. 

The government has allocated Rs 70,000 crore for total fertiliser subsidy for this fiscal, of which Rs 19,000 crore has been earmarked for decontrolled P&K fertilisers.