While this move could be construed as a positive step towards the transfer of powers from the centre to the states, a look at the possible implications is enough to convince one that it does not merit much praise. The move comes as yet another blow to the phosphatic fertiliser industry, which has not recovered from the shock it suffered as a result of the government's volte-face on the issue of DAP price decontrol.

The industry has expressed concerns over the demand by some states that the manufacturers cut their prices by at least Rs 300 per tonne as the central subsidy on SSP has gone up by this amount. The industry's contention that the rise in subsidy was necessitated by the rise in costs and does not add to profit margins needs serious consideration.

The rupee's depreciation hasmade it more expensive to import rock phosphate, the main raw material for phosphatic fertilisers. The increase of Rs 300 per tonne in the central subsidy does not even fully compensate for the rise in input and processing costs. There is, therefore, little room for a price cut.

If the states continue to press for price cuts, it may lead to a situation of acute shortage in the market as producers may be unwilling to supply SSP at reduced prices. A similar situation is developing in case of DAP with the government's decision not to decontrol prices.

The short supply of phosphatic fertilisers will, in effect, contribute further to a worsening NPK ratio, defeating the very purpose that the government hoped to serve through these recently announced measures.