The price concession on the domestically manufactured DAP would thus increase to Rs 4,500 per tonne from Rs 3,500 per tonne.

According to industry sources, BICP is expected to submit its report shortly to the fertiliser ministry. The report deals with the subsidy element for the kharif season of 1998, during which the consumption of DAP was around 22 lakh tonnes.An increase in the subsidy by a thousand rupees would mean bolstering the DAP subsidy burden by another Rs 220 crore to Rs 990 crore for the season under consideration.

A thousand rupees hike would also mean a higher compensation when compared to the Rs 500 per tonne subsidy hike announced recently for the on going rabi season.

DAP manufacturers were not content with the quantum ofsubsidy increase announced for the rabi season as they had demanded a hike of at least Rs 1,500 per tonne. DAP prices are currently ruling at Rs 8,300 per tonne at the farmgate level.

At present, the industry is reeling under cost escalation on inputs because of which some manufacturers are incurring losses. BICP was asked to conduct a study by the ministry of agriculture for which it collected the required data from manufacturers to estimate the actual cost on production of DAP.

The study is basically to enable the government to ascertain the correct level at which concessions should be given. The study on the gap between production costs and the maximum retail prices would also determine any increase in input prices.

If input prices are found to have risen beyond earlier assessed levels, the concessions allowed to fertiliser firms will have to change accordingly.The offtake of DAP in kharif'98 dropped as compared to the previous year. As against a total offtake of 30 lakh tonnes of DAP in kharif'97,the current year's kharif season ended with an offtake of just about 22 lakh tonnes of DAP. The consumption includes production of 18 lakh tonnes of DAP and 10 lakh tonnes of imports during the kharif season.

The total subsidy level for the fertiliser sector increased by 21.8 per cent to Rs 7,426 crore in 1997-98, from Rs 6,093 crore during 1996-98. For 1998-99, the subsidy on decontrolled fertilisers has been hiked to Rs 3,000 crore.