Paswan: Ground reality

New Delhi, Feb. 21: The government will introduce a more stringent urea pricing policy from April, which will make it difficult for fertiliser companies to claim high subsidies.

The new urea pricing policy will come into effect from April 1, chemicals and fertilisers minister Ram Vilas Paswan told chieftains of the Indian fertiliser industry today.

The new policy will comprise stage III of the new pricing scheme based on the recommendations of the working group headed by economist Y.K. Alagh.

The recommendations have been submitted to the government after reviewing stages I and II of the new pricing scheme, Paswan said.

He said the objective of the new policy is to ensure availability of fertilisers to farmers at affordable rates that would boost agricultural growth, a pre-requisite for the country’s food security.

The CEOs of the fertiliser industry had urged the government to rationalise the pricing of liquid hydrocarbons used in manufacturing urea. They said the profitability of the indigenous urea industry was adversely affected by the high tax rates on cost of inputs, especially the feedstock.

The fertiliser and petroleum ministries have locked horns over natural gas prices. The petroleum ministry wants to raise the prices of natural gas as they are far below the market rates and ONGC and Oil India Ltd are losing out.

The fertiliser ministry has pointed out that fertiliser is sold at regulated prices to farmers and in case the price of natural gas is raised, the cost of production for the fertiliser industry, which uses it as a feedstock, will also shoot up. This, in turn, will increase the fertiliser subsidy burden on the government.