Govt constitutes GoM to review urea pricing policy

Facing a mounting subsidy burden and imbalanced use of fertilisers, government has constituted a Group of Ministers (GoM), which is likely to be headed by Agriculture Minister Sharad Pawar to look into urea pricing.

Apart from Pawar, the GoM will include Finance Minister P Chidambaram, Fertiliser Minister M K Alagiri and Oil Minister M Veerappa Moily.

"The government has formed a GoM, which is most likely to be headed by Sharad Pawar and it will look into the modified New Pricing Scheme (NPS) III for urea as well as consider earlier proposals for de-regulating the sector," a senior Fertiliser Ministry official said.

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Urea is the only fertiliser that remains under full price control. Its current retail price is Rs 5,360 per tonne. The proposal to hike urea prices was made to redress imbalanced use of soil nutrients and reduce government's subsidy burden.

Another senior official in the ministry said the department of fertilisers is not in favour of raising the prices of the key nitrogenous crop nutrient as the farmers are already facing high prices of phosphatic (P) and potassic (K) fertilisers.

"After the Cabinet Committee of Economic Affairs's (CCEA) decision in June 2012 to send the proposal back to the GoM on urea prices to be reviewed again, the Ministry had some three months back sent its revised proposal to Prime Minister's Office (PMO) and it has been with them since then," the official said.

PMO acted on the proposal last week and asked a GoM to be formed to reconsider the urea pricing policy. The constitution of the GOM comes in the backdrop of stiff resistance by Fertiliser Ministry in raising urea prices
and bringing the sector under the nutrient based policy (NBS) like P&K fertilisers.

In June last year, CCEA had deferred the ministry's proposal to increase the retail prices of urea by 10 per cent. It had sent the proposal back for review to the then GoM, which was headed by then Finance Minister Pranab Mukherjee.

Earlier, the government had plans to decontrol the urea sector by bringing it under the nutrient based subsidy (NBS) scheme. A committee headed by Planning Commission member Saumitra Chaudhary had also suggested freeing of the sector. However, the proposal hit a road block as the Fertiliser Ministry, among others, opposed it in view of rise in retail prices of P&K fertilisers after they were decontrolled in April 2010.