Sunday 8 April 2012

INDIAN SCENATRIO OF FERTILIZER PRODUCTION AND TARGET. FY 2012-2013


Analysis The country`s fertiliser production is pegged at 36.87 million tons in the 2012-13 fiscal, up over eight per cent from last fiscal.
`“We have kept a production target of 3,68,75,300 tons of fertilizer for this financial year, which is slightly higher than 3,41,09,700 tons in last fiscal,`` a senior Fertilizer Ministry official said.
Of this, fertiliser companies will produce 18.14 mt of soil nutrients during the kharif (summer) season and the rest 18.73 mt in the rabi (winter) period of 2012-13, the official said.
While urea production is estimated at the previous year’s level of 22.57 mt, that of complexes and di-ammonium phosphate (DAP) has been pegged higher at 9.98 mt and 4.31 mt, respectively, this year.
Last fiscal, the production of complexes and DAP was estimated at 7.82 mt and 3.71 mt each. Domestic demand for urea is 27-28 mt and the shortage of 6-7 mt will be met through imports.
Similarly, the gap in availability of DAP and potash will be filled by imports. The country imports half of its requirement of DAP and almost entire requirement of potash
NEW DELHI: The fertiliser ministry is mooting a proposal to raise urea prices by 10%. With this proposed revision, which will have to be endorsed by the Cabinet Committee on Economic Affairs, urea prices will go up from Rs 5,310 per tonne to Rs 5,841 per tonne.
This will help the government to reduce its annual subsidy burden by around Rs 2,000 crore. At present , the annual urea subsidy bill is in excess of Rs 20,000 crore. "The proposal is doing rounds in the ministry for quite some time. It can be implemented only after getting stamped by CCEA," said a senior fertiliser ministry official.
In the last 10 years, the government raised urea prices only once in 2010 by 10% from Rs 4,830 per tonne to Rs 5,310 per tonne. With this, the government saved around Rs 1,200 crore on urea subsidy.
However, the Expenditure Reforms Commission, set up by the government in the year 2000 to work out a road map towards a subsidy-free regime, had recommended an annual price increment of 7% for some time before decontrolling the industry. At Rs 5,310 per tonne, urea is the cheapest fertiliser available.
"Two months ago, the government had cut the subsidy on phosphate and potashbased fertilisers by up to 30%. Now subsidy cut on urea is likely to bring down its indiscriminate use," said the official. This move is in line with Finance Minister Pranab Mukherjee's intent of bringing down central subsidies to 1.75% during the next 3 years.
In his budget speech, he had announced that the government would reduce the outgo on major subsidies including food, oil and fertilisers to Rs 1.79 lakh crore from Rs 2.08 lakh crore estimated in the last fiscal. The industry, however, feels that a 10% increment in prices is not enough.
"The prices of urea need to be revised. Though it won't have any major impact on fertilizer companies, it's a small step towards promoting balanced fertiliser use. Due to a major gap between NPK fertilizer prices and urea prices, the latter is being excessively used, taking a huge toll on the soil.
There's still scope of quick revisions," said Satish Chander, director general of Fertilizer Association of India (FAI). According to the industry, the annual demand for urea in the country is around 28 million tonne of which 22 million tonne is indigenously produced and the rest imported. The cost of urea production in the country is around Rs 13,000 per tonne while the import cost is around Rs 23,000 per tonne.
"With the government fixing the maximum retail price at Rs 5,310 per tonne, the difference between the cost of production or import and the MRP is being borne by the government in the form of subsidy," said another ministry official.

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