The Department of Fertilizers (DoF) plans to bring in all policies, including the New Investment Policy meant to overhaul urea production, under one umbrella - Nutrient-Based Subsidy (NBS) policy.
The government was earlier planning to review the New Investment Policy of 2008, but according to a senior DoF official, the policy is likely to be put on ice and they would come up with one integrated policy for the fertiliser sector to give more teeth to the NBS policy.
"It is better to have one umbrella policy, which will subsume everything. And since NBS has been the most recent initiative by the department with much ambition, we plan to include all policies under it to avoid confusion and make it investor-friendly, as we want some greenfield investment to take place in the sector," said the official, who did not wish to be named.
The government also plans to strengthen NBS by revising the scheme for all fertilisers and subsequently covering urea, currently out of the policy.
According to the official, the main objective of DoF is to augment domestic production of urea, which has been stagnant for several years, and reduce its imports. The department also aims at making the sector more attractive for global and domestic investors.
DoF is giving final touches to the proposal after which it will be put up for inter-ministerial consultation and dialogue with the industry.
Urea is the most consumed fertiliser in the country, followed by di-ammonium phosphate. NBS, which came into effect from April 1, was introduced to decontrol fertiliser prices by giving greater flexibility to companies to fix farm-gate prices.
The government aims to bring all subsidies related to the oil and fertilisers sectors under its fiscal accounting.
On February 18, the government raised the prices of urea by 10 per cent to Rs 5,310 a tonne from Rs 4,830. The decision came into effect on April 1. The revenue foregone towards fertiliser subsidy in 2009-10 stood at Rs 8,010 crore (Rs 80.1 billion), which was 3.22 per cent of the total revenue forgone.
Compared to this, revenue forgone on fertiliser subsidy in 2008-09 stood at Rs 14,200 crore (Rs 142 billion), 6.3 per cent of the total revenue forgone in the financial year. Due to a good monsoon this year, the subsidy payout could reach Rs 75,000 crore (Rs 750 billion), compared to the Budget estimate of Rs 55,000 crore (Rs 550 billion).
