Finally adhoc subsidy for SSP was given from kharif 93, to be disbursed by the state governments. Thus for the first time in the history of Indian Fertiliser Industry, state governments were involved with fertiliser pricing and subsidy disbursement.

The procedure for subsidy disbursement adopted by various state governments was different. Some state governments insisted that the entire subsidy should be rooted through state level institutions. This meant that billing to the customers had to be done through institutions.

Some state governments did not recommend any subsidy for one or two seasons for various products while some imposed channel-wise restrictions on the sale of fertilisers and did not recommend subsidy if the restrictions were not followed.

The release ofsubsidy by the centre to state governments was a time consuming process. The state governments released it to the institutions who in turn paid it to the manufacturers. At every stage there were delays and subsidy disbursement took six to 12 months to complete. The certification, to be done by states of actual supplies made to various parts state agencies, also took long time delaying the subsidy.

Subsidy cases for July 1996 difference and the April 1997 difference are still to be finalised.

The state governments were not fully familiar with the procedure of fixing the prices, which affected the fixation of prices. In one state, no sale of complex fertilisers took place in October-November 1996 because the price was not fixed.

The inadequate price, the uncertainty over price particularly during the peak demand period and a delay in disbursement of subsidy have been due to three major factors. High prices of phosphatic fertilisers have been a cause but the impact of high prices on consumption would havebeen greatly minimised subsidies have been released in time.

In 1997-98 when the price was finalised centrally and a significant part of the subsidy was released on time from Delhi, phosphate consumption increased.

The quantum of subsidy for various phosphatic fertilisers has tremendously increased during last 2 years. DAP has gone from Rs 1000 to Rs 4000, SSP from Rs 340 to Rs 900 and subsidy of other phosphates have been hiked three times. The market prices are artificially kept low and so dependence on subsidy is extremely high. This is affecting the cash flow of the manufacturers.

It is necessary to drastically reduce the subsidy for phosphatic fertiliser in the coming three to four seasons by increasing the market prices every season in a phased manner or release 100 per cent subsidy from Delhi itself without waiting for state governments' recommendation.

Prices of all fertilisers should be fixed by the centre or by manufacturers themselves, which can avoid delays to a great extent.

A majorproducer, Oswal is going to produce 6000 tonne DAP per day from February 1999. This would mean a subsidy of Rs 2.4 crore per day or Rs 72 crore per month for the company. If the subsidy is delayed by one month the company would lose Rs one crore by way of interest. Can any company afford this?

The manufacturers will have to take up this issue very seriously and move for fixation of market price on their own.

Every season the market price should go up for DAP by Rs 800 to Rs 1000 per tonne in a phase manner. The DAP price should go up to Rs 12500 to Rs 13500 per tonne by October 2000 and subsidy reduced-to say Rs 1000 to Rs 1500 per tonne.

Similarly, for other products also, market price should go up and subsidy can decrease. For SSP the market price should go to a level of Rs 4000 by October 2000 and subsidy either totally eliminated or reduced to a level of Rs 200 to Rs 300 per tonne. Both in budget of '98 and in August 98 the government has shown willingness to increase the market price. Manufacturersshould take the initiative to make this a reality.

(The author is the director of Rama Phosphate Ltd)