Government set to slash subsidy on di-ammonium phosphate, muriate of potash for FY'13

NEW DELHI: The government is set to reduce further the subsidy on non-urea fertilisers like di-ammonium phosphate (DAP) and muriate of potash (MoP), in the wake of strengthening rupee and bearish global price.

The pricing of phosphatic and potassium fertilisers like DAP and MoP was freed from the government control in April 2010, but the government continues to offer subsidy to keep prices down.

Last month, the Inter-Ministerial Committee (IMC) had decided to reduce the subsidy on DAP and MoP to Rs 15,000 a tonne for the 2012-13 fiscal from the existing level of Rs 19,763 a tonne and Rs 16,054 a tonne, respectively.

The IMC has representation from senior officials of Fertiliser, Agriculture and Finance Ministries.

However, the Finance Ministry felt that there was a case for further reduction in the subsidy level considering strengthening of rupee and bearish global prices, a senior government official said.

As a result, the IMC in its meeting held early this month, reduced further the subsidy to Rs 14,350 a tonne on DAP and Rs 14,400 a tonne on MoP, the official said.

The new subsidy rates, to be applicable for 2012-13, are subject to the Cabinet clearance.

The subsidy is benchmarked against the global prices. So, if international rates are coming down, subsidy too have to be cut, the official said.

India imports almost half of its requirement of DAP and almost entire requirement of MoP.

Retail price of DAP is ruling at around Rs 20,000 per tonne and MOP is available at Rs 12,000 per tonne.