Urea Prices not to be increased this Financial Year

Urea prices wont be hiked this year. Central Government has deferred to hike the price of Urea by 10 percent  to next Financial year.

The hike was proposed by the fertiliser ministry to reduce the subsidy burden, limiting the excessive use of the soil nutrient in the country compared to phosphatic and potassic fertilisers. In 2011-12, urea is estimated to have contributed Rs.24,500 crore to the fertiliser subsidy bill.

“It (the proposal) has gone back to the ministry. They have to take a second look,” Home Minister P. Chidambaram told reporters after a meeting of the Cabinet Committee of Economic Affairs.

Pawar opposed the proposal contending that farmers are already burdened with high cost of inputs and any increase in urea prices would hit them further. He pointed out that the hike in prices would benefit urea companies which are making huge profits, they added.

Urea price at present is fully controlled. It was last revised in April 2010 from Rs.4,830 per tonne to the current level of Rs.5,310 a tonne.  Urea is the only fertiliser that remains under full price control.

Farmers find it much cheaper to use urea as compared to other fertiliser like di-ammonium phosphate (DAP) which sells almost four-times higher at Rs 20,200 per tonne.

Earlier, an empowered group of minister had approved deregulating the key fertiliser. The government mainly provides subsidy on fertilisers, fuels and food. The difference between the cost of production and the Maximum Retail Price (MRP) is paid to manufacturers.