Despite a substantial increase in ad-hoc concessions on decontrolled fertilisers announced on Thursday, industry experts feel that the producers would not be able to maintain the existing DAP selling price of Rs 8,300 per tonne keeping in view the increased cost of inputs and rupee devaluation.

Industry sources say the current cost of production and distribution of DAP is about Rs 13,800 to Rs 14,000 per tonne. And after adjusting the Rs 4,000 per tonne concession, the selling price may be around Rs 10,000 per tonne.

Selling prices are likely to be below the Rs 10,000 per tonne mark as the abolition of MRP would increase competition among producers and importers, they say.

Fertiliser Association of India (FAI) director general Pratap Narayan, however, welcomed the government's decision of keeping the concession amount fixed and leaving the determination of sale price to the industry and said "now producers and importers can take better business decisions."

Against the fertiliser consumption of about 52.2 lakh tonnes during 1997-98, the consumption is likely to be significantly lower this year, industry sources said.

The low consumption of phosphatic and potassic fertilisers would further deteriorate the nutrient balance and affect crop productivity in the long run, they said.

FAI has also demanded expeditious disbursal of subsidies. According to an estimate, around Rs 650 crore of industry funds are locked up with government in arrears, posing serious liquidity problems.

Industry has welcomed the increase in concessions on complex fertilisers by taking into account proportionate "P" (phosphorous) and "N" (nitrogen) content.

According to the existing procedure, while fixing the consumer price and concession amount of complex fertilisers, only proportionate "p" content is taken into account and the "N" content is totally ignored.

The increased concessions on phosphatic and potassic fertiliser would cost the exchequer an additional burden of Rs 1,000 crore and reach a level of Rs 4,000 crore annually.