According to a report published in the Indian Express, the Narendra Modi-led government is planning to do away with price controls on urea and repeal an import duty of 5% in order to minimise expenditure on subsidy.
Expenditure on fertiliser subsidy had increased four times in the last decade as the UPA government had kept urea prices below its production cost. It is pertinent to mention here that urea is the most commonly used fertiliser in the country. The newspaper reported that decontrolling of the maximum retail price (MRP) of urea (which is presently Rs 5,360 per tonne) is under consideration of the new government. It also said that the MRP is likely to be raised by about 20% per annum over the next three years.
Although the cost of urea has increased by merely16.5% since 2000, the cost of non-urea fertilisers has increased by almost three times and “muriate of potash has quadrupled.” Farmers have started using urea indiscriminately due to such an increase in the gap between prices.
This move is expected to help domestic fertiliser companies like Chambal Fertilisers and Chemicals and Rashtriya Chemicals and Fertilizers Ltd. If the import duty is scrapped, it would help Canada's Potash Corp of Saskatchewan, Mosaic Co of the United States and Russia's Uralkali.
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