Decision on Raising Retail Price of Urea Deferred

The group of ministers constituted to find ways to deregulate urea pricing deferred a decision on raising the retail price of urea for farmers on 5 January 2011. The panel rejected a proposal moved by the department of fertilizers which had sought to continue with urea pricing under the New Pricing Scheme. A committee of secretaries (CoS) is to prepare a report by next month on including the countrys most consumed fertilizer under the nutrient-based subsidy or NBS regime. Bringing urea under the NBS regime would mean that the government would gradually free retail price of urea and urea based products. It would also mean encouraging balanced use of fertilizers. Under the NBS regime the government will fix a subsidy for each year for urea and urea-based products. Once brought under the NBS regime the private sector will be able to import urea at competitive prices and pass on the benefits to farmers even while keeping price increases within a band.

Priced at Rs 5310 per tonne urea is the cheapest available fertiliser in the market, which is the reason for its overuse by farmers. The fertilizer industry has been pressing the government to bring urea under NBS in order to encourage entrepreneurs to invest in the sector. The government had with the introduction of NBS in April 2010 freed potashic and phosphatic fertilisers. However the government still controls price and movement of urea which constitutes about 50% of India's fertiliser consumption.