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Will PM turn to fertiliser prices now?

Monday 21 June 2004

NEW DELHI: Mrs Manmohan Singh better watch out. After miya-PM discounted her kitchen woes by raising cooking gas price, she now faces the prospect of dishing out more for her subzi. Unless the government doles out Rs 17,400 crore as subsidy to keep fertiliser prices from going up.

Unlike oil prices, neither the PM nor the finance minister will find it easy to say no to Ram Vilas Paswan’s demand for Rs 5,000 crore more as subsidy. A Rs 2/litre hike in petrol price may have passed people’s muster, but higher dal-chawal-sabzi bhav may yield a politically disastrous crop for the government.

Big farmers may pass on the increase in fertiliser prices to consumers but small and marginal farmers may not find it easy. But the finance ministry has always been cagey about the issue as it feels the subsidy only benefits the industry and not farmers.

Paswan said on Friday that his ministry was asking for Rs 17,400 crore in 2004-05 against 12,400 in 2003-04 as production costs have increased 30% in the wake of higher global prices of inputs like potash and phosphoric acid.

Paswan said every $1/tonne increase in world prices of phosphoric acid and potash, the key ingredients of phosphoric and potassic fertilisers, respectively, translates into a subsidy of Rs 9 crore.

The total subsidy of Rs 12,400 crore in 2003-04 includes Rs 8,000 crore for urea manufacturing units and another Rs 400 crore for urea imports if the situation so warrants. But the actual outgo has been higher on account of higher input costs.


in The Times of India, Monday, June 21, 2004.

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