The government is making arrangements to increase subsidies for fertliser over the next few years, though earlier, it had indicated that subsidies would be phased out gradually.
This financial year, the total subsidy towards fertiliser could go up to as high as Rs 80,000 crore with rising international fertiliser prices.
The budgetary provision for the 2007-08 stood at Rs 22,450 crore. However, an additional amount of Rs 15,440 crore was financed through a mix of cash and bonds. The move has not made the fertilizer industry too happy. Industry insiders said that fertilizer bonds would not provide any relief to the companies. ?As far as the subsidy regime is concerned, there is no immediate relief, and this is evident from finance minister P Chidambram?s budget presentation, a senior official of Fertiliser Association of India (FAI) told FE.
India has been severely affected due to the hike in global price hike in fertiliser, as it is one of the largest importers of fertiliser.
Meanwhile, the International Fertiliser Association would hold its annual conference next month. Availability of fertiliser will be one of the key issues on the agenda. Ajay S Shriram, chairman and senior managing director, DCM Shriram Consolidated (also a member of IFA) said that demand for fertiliser is growing much faster than production. ?It is a cause for concern in case the trend continues,? Shriram said, adding that the demand globally is increasing by 2-3% annually. ?In case the gap between demand and supply is not bridged, there could also be a food scarcity at a later stage,? he pointed out.
Analysts said that given the current market trends, both domestically and globally, it is unlikely that feedstock or raw material prices would fall.
Subsidies would increase with general elections inching closer. The government is also examining proposals to move to a nutrient-based subsidy regime while devising alternate methods of delivering subsidy, official sources said.