Open ended subsidy on urea is wrong, illogical: Montek

NEW DELHI: Open ended subsidy on urea is "wrong", "illogical" and is damaging Indian agriculture, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.

"I think that it (urea subsidy) is wrong, illogical, costs too much money and damaging our agriculture. Now having said that, that is my view. That is what we have said in the Planning Commission.

"I am on various GoMs where this issue has come up and I express this view. I think we should change. It is totally clear to me that the present system of subsidy on fertilisers is not viable," Ahluwalia said on the sidelines of ICC Asia Pacific CEO Forum organised by Ficci.

Urea is the only fertiliser that remains under full price control. Its current retail price is Rs 5,360 per tonne.

Under the nutrient based subsidy (NBS) regime introduced on April 1, 2010, retail prices of 22 varieties of phosphatic and potassic (P&K) fertilisers have been freed, but government reimburses companies the cost of selling these soil nutrients at lower price to farmers.

"The Planning Commission's view is that we should move to a rational system of subsidy on chemical fertilisers, which equalises the subsidy given to different fertiliser. Present position is that we have a per nutrient subsidy for P&K, but for nitrogen we have an open ended subsidy," Ahluwalia added.

The government has lowered fertiliser subsidy marginally to Rs 65,971.50 crore for the next fiscal, compared to the revised estimate of Rs 65,974 crore in 2012-13 fiscal.

Under the subsidy for 2013-14, the government would provide Rs 15,544.44 crore for imported urea, Rs 21,000 crore for indigenous (urea) fertiliser and Rs 29,426.86 crore for the sale of decontrolled fertilisers (DAP, MOP and complexes).