Govt hikes fertiliser subsidy by 10%

In various parts of Haryana and Uttar Pradesh, farmers were forced to buy DAP in the black market, or to wait in queues for days, before getting rationed supplies. Since there was only a minor disruption of supplies in Punjab, the dislocation here was limited.

According to trade sources, the Government had indicated to them last week that the subsidy would be hiked and that companies should begin contracting DAP imports quickly in the last three days alone, around 55,000 tonnes of DAP has been contracted and is expected to land in India within a week. In November, with traders dissatisfied with the amount of subsidy, import contracts for over 1 lakh tonnes of DAP were cancelled.

According to Government sources, there is another 2.5 lakh tonnes of DAP in the Vizag and JNPT port in Mumbai, and this is being transported quicklyto the northern states which are experiencing the largest shortages. The 55,000 tonnes contracted a few days ago, however, will take around a fortnight or so to be transported to the interior parts of the country, after they land at the port. Details of the exact subsidy are being ironed out with the Department of Fertilisers and the Agriculture Ministry, and are likely to be announced in Parliament on Monday or Tuesday. It is expected that the existing ad hoc subsidy for the rabi season of Rs 4,000 per tonne for local DAP (and Rs 2,500 for the imported one) will be increased to Rs 4,400 per tonne (and Rs 2,900). These increased prices will also be applicable for the kharif season which ended on October 1 — producers were paid an ad hoc subsidy of Rs 3,500 per tonne for local DAP (Rs 2,000 for imported) for the kharif season.

The heart of the problem of DAP shortage, it will be recalled, is the fact that while the Government had announced a fixed subsidy in August, it had announced that the industry wouldalso be free to fix prices on its own.