MUMBAI, January 28: Major policy decisions on the fertiliser industry, including the much-awaited Hanumantha Rao Committee Report, which was to announce its recommendations by January-end, have been put on hold till the Lok Sabha elections are over.The government had set up a high-powered committee last year to define a clear-cut policy on fertilisers. The industry was hoping for an early announcement. The committee's report was expected to do away with the uncertainty in the sector.
The main aim was to outline a fresh policy, especially regarding the retention-price scheme. The industry, owing to these bottlenecks, was not attracting substantial fresh investments. The investment slide is a cause for worry since the country is a bulk importer of the commodity.
A policy decision on issues like the reduction in subsidy on di-ammonium phosphate (DAP), pending for a month, has also been put on hold. While this is in the industry's favour, but whether the government will further delay the disbursement ofsubsidy pending since October 1997, is disturbing it. The subsidy payable to the industry is over Rs 600 crore for decontrolled fertilisers like DAP, single super phosphate (SSP) and other complexes.
The subsidy payment was centralised -- but not for SSP -- to avoid delays. The centre has to reimburse 80 per cent of the total subsidy. The balance is paid by the respective state. The delay in disbursement of the subsidy to the manufacturers has created a shortage of funds, sources said.
The ministry of agriculture was considering reducing the subsidy on DAP by Rs 250 per tonne. The present ad-hoc subsidy on indigenous DAP is Rs 3,750 per tonne and that on the imported variety is Rs 2,250 per tonne.
A proposal to centralise the pricing for single super phosphate (SSP) fertiliser has been placed before the ministry of fertilisers & chemicals. At present, the price of SSP is fixed by the respective state.
SSP was excluded from the list of decontrolled fertilisers. Its pricing was centralised by thegovernment last year. The reason cited for the exclusion was there existed no uniform price of SSP across the country.
The industry, however, is understood to have chalked out a method to make it easier for manufacturers who do not stand to gain from a uniform price. Sources in the know of the matter said SSP manufacturers in West Bengal, where the port rates were high, would get a higher price fixed by the centre. A single price will prevail in the country's other parts.
Though states like Karnataka, Gujarat and Andhra Pradesh have declared their price for SSP for kharif, the Maharashtra government is still dilly-dallying over the issue. The industry has demanded a hike of Rs 300 per tonne in the price of SSP in the state in view of the rise in production costs. The present price of SSP (powdered) is Rs 2,665 per tonne.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
