Govt rules out decontrolling urea prices

The government has ruled out any possibility of decontrolling prices of urea in the market. In a written reply to a question related to urea subsidies, Union Minister for Chemicals and Fertilisers D.V. Sadananda Gowda said that there is no proposal at present to decrease the amount of subsidies on fertilizers.

“There is no proposal for fixing a Nutrient – Based Subsidy rate (NBS) for urea and hence, question does not arise to decontrol the prices of urea in the market,” he stated.

He stated that for Potassic & Phosphatic (P&K) fertilizers, the Government is implementing Nutrient Based Subsidy (NBS) Scheme w.e.f 1.4.2010.


“Under the NBS Policy, the Government announces a fixed rate of subsidy (in Rs. per Kg basis), on each nutrient of subsidized P&K fertilizers, namely Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S), on annual basis taking into account all relevant factors including international prices, exchange rate, inventory level and prevailing Maximum Retail Prices of P&K fertilizers. The per Kg subsidy rates on the nutrients N, P, K, S are converted into per Tonne subsidy on the various subsidized P&K fertilizers covered under NBS Policy,” he stayed.

The government has paid Rs 69,197.96 crore as fertiliser subsidy in 2017-18 and Rs 73,435.21 crore in 2018-19.

Gowda stated that urea is being provided to the farmers at a statutorily notified Maximum Retail Price (MRP). The MRP of 45 kg bag of Urea is Rs. 242 per bag (exclusive of charges towards neem coating and taxes as applicable) and the MRP of 50 kg bag of Urea is Rs. 268 per bag (exclusive of charges towards neem coating and taxes as applicable).

“The difference between the delivered cost of fertilizers at farm gate and net market realization by the urea units is given as subsidy to the urea manufacturer/importer by the government,” the minister said.