Financial Daily from THE HINDU group of publications
Monday, Aug 29, 2005
Agri-Biz & Commodities - Fertilisers
SSP fertiliser manufacturers in a spot Finance Ministry not to fix maximum retail price
New Delhi , Aug. 28
THE Finance Ministry has refused to take responsibility for fixing the maximum retail price (MRP) for the single super phosphate (SSP) fertiliser. Currently, it is determined by the respective State Governments.
For all the other fertilisers, the Centre determines the MRP as well as the subsidy payable on them. But SSP is the only fertiliser for which the Centre decides the subsidy, while the States decide the MRP.
According to SSP manufacturers, this is leading to a situation where they would be left in the lurch. The industry has been demanding an increase in the subsidy from Rs 650 a tonne to Rs 1,300 a tonne and the fixation of MRP by the Centre.
Following the refusal from the Finance Ministry, SSP manufacturers are afraid that even if the Centre raises the subsidy, the States would reduce the MRP by the same amount.
"There are elections in a number of States in 2006. It would be convenient for the State Governments if they can reduce the price of fertilisers. Earlier, we also had a similar experience.
If the Centre increases the subsidy by Rs 100, the States would be able to cite that as a reason for reducing the price. So at the end, our losses will remain the same," one manufacturer said.
As a result, the production, which has come down by close to 60 per cent during the past four years, would fall further. Already, out of the 118 units that were functioning in 2001, only around 60 are working now and the capacity utilisation is around 47 per cent.
The subsidy for SSP had been last fixed in 2002. Since then, the subsidy for all the other fertilisers such as urea, di-ammonium phosphate (DAP) and muriate of potash (MoP) has been increased.
The SSP makers had been demanding a subsidy based on the nutrient content and on par with DAP.
The sources said that the Committee of Secretaries had sent its recommendations to the Department of Fertilisers (DoF).
The DoF is in the process of preparing a Cabinet note on the issue and plans to send it to the Cabinet Committee on Economic Affairs within the next few weeks, officials said.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line