Union Budget 2014: Govt to formulate new urea policy

New Delhi: Finance Minister Arun Jaitley in his Budget 2014-15 Thursday announced that a new policy for urea will be formulated.

The Economic Survey for 2013-14 tabled in Parliament yesterday lamented the government and farmers were together wasting funds of about more than Rs 8,500 crore on the fertiliser, while pitching for bringing urea under the Nutrient Based Subsidy (NBS) regime.

Jaitley while presenting the budget speech today said: "A new urea policy would also be formulated."

"There have also been growing concerns about the imbalance in the utilisation of different types of fertilisers resulting in deterioration of the soil," he added.

The Economic Survey has also asked for paying subsidy directly to farmers and said the fertiliser's highly subsidised price leads to its unbalanced use, which is also a reason for higher food prices and taxes.

"The issue is soil degradation due to declining fertiliser-use efficency....While urea needs to be brought under the purview of NBS policy, the recommendation of the task force for direct transfer of subsidy under the chairmanship of Nandan Nilekani, for phased shifting to direct transfer of fertiliser subsidy to farmers, merits consideration on priority," the survey had said.

At present urea in under product based subsidy (PBS), under which for every tonne of urea farmers pay maximum fixed price of Rs 5,360 per tonne, whereas government pays about Rs 11,760 per tonne as subsidy for the same quantity, resulting in wastage of funds on government account.

As the urea price, which is the main source of nitrogen (N), is highly subsidised, farmers are using it in
place of phosphorous (P) and potassic (K) leading to unbalanced fertilisation in soil.

However, subsidies on P and K fertilisers were capped since 2010 after they brought under the NBS regime, and at present farmers pay 61 to 75 percent of its delivered cost while rest is subsidised by government.