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Cabinet to decide on fertilizer subsidy today

Last Updated: Thursday, February 18, 2010 - 09:35

New Delhi: Amid opposition from key allies, including Fertilizer Minister and DMK leader M K Alagiri, the government is likely to take a decision on whether or not to implement the nutrient-based subsidy for the fertilizer sector.

"The Cabinet will take the decision tomorrow on whether to introduce the new nutrient-based subsidy (NBS) scheme from next year," a senior government official said.

Last week, Fertliser Minister M K Alagiri had met Finance Minister Pranab Mukherjee and sought deferring NBS as the industry did not give any written assurance on not increasing prices.

Fertilizers are sold at government-fixed prices, which are lower than their costs of production or import. The difference is met through subsidy.

At present, the subsidy is given on product basis, like subsidy on urea and DAP. The government plans to replace it with NBS under which the subsidy is given on the basis nutrients like nitrogen phosphorus and potash in the product.
The NBS does away with maximum retail price (MRP). It proposes to replace the current system of giving subsidy to the industry with direct assistance to farmers.
Besides, the government also wanted to cap the subsidy at Rs 50,000 crore, sources said. The fertilizer subsidy last fiscal stood at over Rs 1 lakh crore.

Bureau Report

First Published: Thursday, February 18, 2010 - 09:35
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