Fertiliser industry unimpressed over budget proposals


Chennai : Though the union budget has announced a number of initiatives favouring farmers, including the loan waiver of Rs.600 billion ($15 billion), the fertiliser industry, one of the links in the agriculture chain, has remained unimpressed over budget proposals.

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Finance Minister P. Chidambaram’s announcement that the government was considering nutrient based fertiliser subsidy also seems not to have gone down well with the industry leaders.

A. Vellayan, vice-chairman of Murugappa Group, said the agriculture growth in India should be improved with a renewed focus on productivity, research and development and more pragmatic agriculture policies.

To achieve a four percent growth in agriculture from last year’s 2.6 percent, the fertiliser industry needs total support from the government, Vellayan said. According to him, the government is reluctant to increase the retail price.

“In my estimate, the amount required in terms of subsidy allocation in the fertiliser sector for 2008-09 is Rs.800 billion (Urea Rs.400 billion, DAP, Complex Rs.300 billion, overall carry over from last year Rs.1 billion),” he said.

However, the cash payment provision in the budget is Rs.308 billion (Urea Rs.200 billion and Rs.108 billion for de-controlled fertilisers).

According to him, in cash terms there is a shortfall in subsidy of Rs.500 billion for the year 2008-09.

“It is not clear how this money will be paid to the industry,” he remarked.

According to him, the government should follow the sequence of announcing a long-term policy for urea and phosphatics, tying up of imported raw materials for domestic manufacturers and only then go for imports of fertilizers.