While the selling price of urea has been hiked by 11.1 per cent, the central issue prices of wheat has been raised by 40 per cent and that of rice by 30 per cent. The subsidy on PDS sugar has been totally removed in the absence of any hike in levy sugar prices to the mills.

The farmers will now get urea at the rate of Rs 4,000 per tonne in lieu of Rs 3,600 per tonne with immediate effect. The price of wheat for those living below the poverty line (BPL) has been raised to Rs 3.25 per kg from Rs 2.50 per kg. Those living above the poverty line (APL) will now pay Rs 6.50 per kg in place of Rs 4.50 per kg.

Similarly, the BPL families will get common variety of rice at Rs 4.52 per kg in place of Rs 3.50 per kg. The APL families will get common variety rice at the rate of Rs 9.05 per kg inlieu of Rs 5.00 per kg. As the central issue price for sugar under PDS has been raised by Rs 0.60 per kg, sugar will now be available at Rs 12 per kg instead of Rs 11.40 per kg.

The government hopes to make a saving of Rs 5000 crore annually due to hike in farmgate price of urea, and central issue prices of sugar, rice and wheat distributed under PDS. In the last Budget session of parliament, the government was unable to raise the urea prices by a rupee owing to strong opposition from the Opposition benches. The government succumbed to the initial pressures from the Opposition and sought to increase it by Rs 0.50. But owing to severe opposition the government withdrew the proposed hike.

Commenting on the increase in farmgate price of urea, Kribhco MD, PP Singh said that the hike in urea prices will not adversely affect the company as it has the lowest cost of production at Rs 3300 per tonne.

As the retention price fixed for the company is Rs 4300 per tonne, the company will continue to get the subsidyof about Rs 400 per tonne. As there is no change in the retention price, the 11.1 increase in price will be recovered from the farmers. Several agricultural scientists has welcome the move to increase urea prices as this would help in checking distortion of the fertiliser consumption ratio.

The CPI and the CPM denounced the increase in the prices of rice, wheat and sugar distributed through the public distribution system saying the middle and lower middle class would be badly affected.

CPI national secretary Atul Kumar Anjan said the decision was not in the interest of the common man who had already been affected by price rise.

Increase in the price of urea needed for the cultivation of rabi crop would not not only affect the farmers but would also reduce agricultural production. The government should give up the anti-people and anti farmer attitude, Anjan said.

The politburo of the CPI (M) said the government in a desperate bid to reduce the huge fiscal deficit before the presentation of the budgetfor 1999-2000,decided to raise resources at the expense of the common people, the people were being forced to pay more because of the government's wrong economic policy,the CPI(M) said.

The Congress also strongly opposed the decision saying that the "BJP-led government is anti-poor."