Agriculture Know-how: Nutrient Based Subsidy (NBS) Policy on decontrolled Phosphatic & Potassic fertilizer

New Delhi: The Cabinet has approved to implement the Nutrient Based Subsidy (NBS) Policy on decontrolled Phosphatic & Potassic  fertilizer with effect from 1st April, 2010.  It has been decided to fix the subsidy on the nutrients ‘N’  - Nitrogen, ‘P’ - Phosphorus, ‘K’ - Potash and ‘S’ – Sulphur contents for the year 2010-11.  In addition to the fixed subsidy on above mentioned nutrients, there will be an additional per tonne subsidy for subsidized fertilizer carrying other secondary nutrients and micro nutrients in formulations approved under FCO 1985.

The intent of the Government to move towards NBS in fertilizer sector was announced in the Budget Speech of 2009-2010 delivered by the Finance Minister. The NBS regime is expected to promote balanced fertilization and consequently increase agriculture productivity in the country through higher usage of secondary and micro nutrients.  It is also expected that new innovative fertilizer products would be developed subsequently under the NBS regime to meet the different requirements of Indian agriculture. The NBS regime is expected to depict the actual demand of fertilizers in the country and promote realistic pricing of fertilizer products in the international market. Unshackling of fertilizer industry is also expected to attract fresh investments in this sector.

It has also been decided to constitute an Inter-Ministerial Committee under the Chairmanship of Secretary (Fertilizers) to examine various scenarios and make recommendations for finalization of per nutrient subsidy to the Government under the proposed Policy.

Under the Nutrient Based Subsidy (NBS) regime, since the subsidy on the subsidisednutrients and consequently subsidized fertilizers will remain fixed, the retail prices of subsidized fertilizers at farmgate level will be decided by the Companies. The Fertilizer Industry has assured that under NBS regime, the price line around the current level would be maintained during Kharif-2010. The Government in consultation with the fertilizer industry will make interventions in such a manner that the farmgate prices of non-urea fertilizers are, as far as possible, near the current prices so that the farmers are not adversely affected.

The provision of additional subsidy for fortified and supplemented fertilizer will encourage production and application of fertilizers carrying secondary and micro nutrients.

Urea which has the maximum tonnage consumed nitrogenous fertilizers in the country will continue to be under the current MRP regime.  However, it has been decided to increase the maximum retail price of urea from Rs.4830/- per MT to Rs.5310/- per MT with effect from1st April, 2010.

The subsidy will continue to be disbursed through the Industry during the first phase.  The industry will receive subsidy based on certification of sale by the State Governments / Statutory Auditors of the Company as in the past. The implementation and distribution of the fertilizer will continue to be monitored through the on-line web based “Fertilizer Monitoring System”.