FY10 subsidy burden seen around Rs 56,000cr: Fert Secy

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Q: What is the demand supply situation on urea and for phosphatic fertilizers and also could this be a prelude to either partially or totally decontrolling urea and other fertilizer prices?

A: At this point of time the urea decontrol is not envisaged. But on the overall demand we have projected the demand in consultation with the Department of Agriculture and in cooperation with the Ministry of Agriculture and we have approximately a requirement of 27 million tonnes of urea and about 11 million tonnes of DAP and 4 million tonnes of MOP plus complexes are also going to be on OGL as per the new dispensation because the products that are on OGL, the exact amount that will be imported will depend on the actual demand at the field level.

Q: You said that the idea was to encourage competition at the gate level. There is still this overall understanding with the fertilizer industry, the directive, that prices shouldn't rise much from current levels. How much competition can you engender at all with this overall directive, and what is going to be your next step on urea, you said something about improving the profitability of urea companies so if you could elaborate on that as well?

A: At this point of time urea prices will continue to be controlled. But at the same time we are trying to find out those areas of retention or recovery which are causing a certain amount of vexation to the industry and we are discussing with the industry in a series of meetings and we will be able to evolve a policy and then take it before the cabinet to find out what can be done under the new pricing scheme for urea, which has to be in place by  April 1, 2010.

In so far as your other question regarding competition, yes, we have told the fertilizer companies that we need to do it in a manner that the price rise is under control. So ultimately since it is an item which is of great importance to farmers, it is of national importance that the prices do not rise beyond a certain level.

But what I do expect is that those parties who are able to negotiate better terms and hold the price line will continue to flourish in the market and people who are not able to do so will not obviously be able to do well.

Q: You spoke about the subsidy burden next year or subsidy amount being next year more or less similar to this year. You must have a fix on this years' numbers, what would that be?

A: This year's numbers would again depend on the kind of money that is provided on the second supplementary. But it is of the order of Rs 56,000 crore.

Q: The fertilizer subsidy to be given through the farmer rather than through the company, how far are we and what is the game plan from now to then?

A: At this point of time, we have a dispensation to give it through the company. The next stage would be to try at the retailer outlet and to see whether we can transfer the subsidy at that point.

We will have to work that out. We have a lot of homework to do for that before we can reach that stage, so far the government is confined only to stage one.