Govt May Decontrol Urea Pricing in FY11.

The government is likely to decontrol urea pricing in the current financial year ending in March, fertiliser secretary Sutanu Behuria said on Monday, as it aims to reduce subsidy for the sector.

Fertiliser use in India is heavily skewed towards urea, a nitrogenous nutrient, and the government has been trying to trim its usage as its excessive use is deteriorating soil fertility and reducing crop yields.

Govt may decontrol urea pricing in FY11

"We are also looking at decontrol of urea prices, there can be informal understanding. It is to ensure that prices do not go up to levels that farmers can't buy," Behuria told reporters.

Indian farmers use around 28 million tonnes of urea annually. The country produces about 20-22 million tonnes and imports the rest.

The nutrient accounts for over a third of total the subsidy given to the fertiliser sector.

The government had budgeted a subsidy of Rs 52000 crore for the sector in the current financial year, but now the industry is estimating a requirement of Rs 67000 crore, he said.

The government recently approved Rs 5000 crore additional subsidy for the fertiliser through supplementary grants, he said, adding "we expect in third supplementary the government should release Rs 8000-10000 crore additional subsidy."

Behuria said the government is looking at de-canalization of urea imports, a shift away from the current policy, where only government-mandated agencies could import the nutrient.

The south Asian country has contracted to import 6 million tonnes of urea for the current fiscal, with about 400,000-500,000 tonnes of yet land at Indian shores, he said.

Besides, nearly all contracted quantity of 8 million tones of diammonium phosphate has been landed.

Source : moneycontrol.com