Lok Sabha Question No. 2071 (UNSTARRED), answered on 2016-11-29
Subject: Price of Fertilizers
Ministry: CHEMICALS AND FERTILIZERS
Asked by: BAIJAYANT "JAY" PANDA

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS AND FERTILIZERS DEPARTMENT OF FERTILIZERS

## LOK SABHA

## UNSTARRED QUESTION NO. 2071

TO BE ANSWERED ON

: 29.11.2016

## Price of fertilizers

## 2071  SHRI BAIJAYANT JAY PANDA:

Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a) whether  the  Government has  taken  note  of  the  reservations  expressed  by  the Parliamentary  Standing  Committee  on  Chemicals  and  Fertilizers  regarding  the rising prices of P&K fertilizers;
- (b) if so, the reaction of the Government thereto;
- (c) whether  the  Government  has  any  proposal  to  increase  production  of  low  cost indigenous  fertilizers  and  take  steps  to  reduce  the  fertilizers  subsidy  bill,  as suggested by the Committee; and
- (d) if so, the details thereof?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF CHEMICALS AND FERILIZERS, SHIPPING, ROAD TRANSPORT AND HIGHWAYS

## (SHRI MANSUKH L. MANDAVIYA)

(a) & (b): Yes  Madam.  Under  the  NBS  Scheme  for  P&K  fertilizers,  the  Maximum Retail  Price  (MRP)  is  fixed  by  the  fertilizer  companies  as  per  market  dynamics.  The MRP of P&K fertilizers depends on the international prices of P&K fertilizers and its raw material and exchange rate.

To curb the price rise of P&K fertilizers, the Government is scrutinizing the cost data submitted by the fertilizer companies from 2012-13 to verify the reasonableness of MRPs  of  the  fertilisers  fixed  by  these  fertilizers  companies.  The  Government  has engaged Cost Accountants/ Firms for the scrutiny of the cost data and to submit reports on  the  reasonableness  of  the  MRPs  fixed  by  the  companies.  In  cases,  where  after scrutiny,  unreasonableness  of  MRP  is  established  or  where  there  is  no  correlation between  the  cost  of  production  or  acquisition  and  the  MRP  printed  on  the  bags,  the subsidy may be restricted or denied even if the product otherwise eligible for subsidy under NBS. In proven case of abuse of subsidy mechanism, DoF, on the recommendation  of  Inter-Ministerial  Committee  may  exclude  any  grade/grades  of fertilisers of a particular company or the fertilizer company itself from the NBS scheme.

With fall in international prices of P&K fertilisers, fertiliser companies in the month of  June  2016  has  reduced  the  MRP  of  MOP,  DAP  and  NPK  by  Rs.  5000/MT,  Rs. 2500/MT and Rs. 1000/MT respectively.

(c)&(d):  The  P&K  Fertilisers  are  under  Open  Government  License.  Hence,  the production  and  sell  of  these  fertilisers  are  basically  the  commercial  decisions  of  the companies.  The  Government  doesn't  interfere  in  the  decisions  of  the  companies. However, the Government is promoting use of Single Super Phosphate(SSP) which is a low  cost  indigenous  fertilizer  and  substitute  for  Di  Ammonium  Phosphate  (DAP). Recently,  the  Government  has  removed  the  minimum  production  criteria  for  SSP manufacturers  to  be  eligible  for  subsidy  under  the  NBS  Scheme.  Earlier,  the  SSP manufactures have to produce half of their installed capacity or 40,000 MT whichever is lower during the production year to be eligible for subsidy under the NBS Scheme. In addition to that the Department is also allowing marketing arrangements between the SSP manufacturers and registered fertilizer companies to enable the SSP manufacturers to sell their  products  through  a  larger  marketing  network  of  the  bigger companies. After implementation of the NBS Scheme, subsidy outgo is going down year by year as can be seen in the table mentioned below:

(Rs. in crore)

| Year         |   Subsidy outgo on P&K fertilizers |
|--------------|------------------------------------|
| 2005-06      |                            6596.19 |
| 2006-07      |                           10298.1  |
| 2007-08      |                           16933.8  |
| 2008-09      |                           65554.8  |
| 2009-10      |                           39452.1  |
| 2010-11      |                           41500    |
| 2011-12      |                           36107.9  |
| 2012-13      |                           30576.1  |
| 2013-14      |                           29426.9  |
| 2014-15      |                           20667.3  |
| 2015-16      |                           21937.6  |
| 2016-17 (BE) |                           19000    |

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