While this is good news for other fertilisers, an industry observer hinted that as the nutrient content in the soil needs to be improved considerably, the hike could be higher. Because of the poor quality of soil, yields and agriculture production has remained virtually stagnant. Agricultural output has been stagnating at around 190-195 million tonnes against the target of 240 million tonnes. Thus, in spite of the country receiving abundant rainfall for the last ten years, fertiliser consumption has shown a steady increase.

These factors point out to is that the soil is not `performing' at its best and corrective action need to betaken. Experts say that it will take 10 years to bring back the minerals contents of soil to normal.

A highly placed official with a leading fertiliser manufacturer pointed out that apart from the imbalance in the NPK ratio the soil is highly deficient in sulphur. The need of the hour, he says, is to increase the usage of ammonium sulphate which provides the highest amount of sulphur to the soil. Other complex fertiliser which provide different mineral in different proportion should also be boosted in order to offset the overdose of nitrogen.

An agriculture economist said that as providing subsidy to decontrolled fertilisers makes bad economic sense, the ideal thing should be increasing prices of urea.

In this regards he says, increase in price of urea as per the Hanumantha Rao committee recommendations from Rs 3,600 to Rs 6,050 per tonne should go a long way in bringing back the mineral equilibrium in the soil.

However, a trader pointed out that no government in its right sense would increase theprice of the most popular fertiliser from Rs 3,600 per tonne to Rs 6,050 per tonne in a single year. This is specially not possible if the government at the centre is a new one. His stand seems to be validated from the fact that the ministry of chemicals and fertilisers as well as the agriculture ministry are against any increase in the price of urea.

Another reason pointed out by an economist in a FII to increase the price of urea is that international prices are ruling as low as $80 per tonne. Thus with an increase in farmgate price the subsidy to be paid out for imported urea will be negligible if the government goes in for a 10 per cent hike. In case of higher increases the government would end up making money by importing urea at lower prices and selling it at higher prices.

The estimate of fertiliser subsidy in the interim budget is Rs 7,600 crore for domestically produced controlled fertilisers, Rs 1,183 crore for imported controlled fertilisers and Rs 2,700 crore for decontrolled fertilisers.