The Cabinet Committee of Economic Affairs (CCEA) on Thursday deferred a decision on increasing retail prices of urea by 10 per cent in the face of stiff opposition to the proposal from Agriculture Minister Sharad Pawar.
Urea is the only fertiliser that remains under full price control. Its current retail price is Rs 5,310 per tonne.
"It (the proposal on urea price increase) has gone back to the ministry. They have to take a second look at it," Home Minister P Chidambaram told reporters after the CCEA meeting.
The proposal will be re-examined by the group of ministers, headed by Finance Minister
Pranab Mukherjee , sources said.
Pawar opposed the proposal contending that
farmers are already burdened with high cost of inputs and any increase in
urea prices would hit them further. He pointed out that the hike in prices would benefit urea companies which are making huge profits, they added.
That apart, another key minister sought clarity on the proposal stating that the Fertiliser Ministry was itself not convinced about it.
Sources said the Fertiliser Ministry was made to bring the proposal before the CCEA as the Finance Ministry wanted to reduce the fiscal
deficit by cutting urea subsidy which stood at Rs 24,500 crore last year.
The other reason for bringing down the subsidy on urea was to redress imbalanced use of soil nutrient.
Farmers find it much cheaper to use urea as compared to other fertiliser like di-ammonium phosphate (DAP) which sells almost four-times higher at Rs 20,200 per tonne.
The government mainly provides subsidy on fertilisers, fuels and food. The difference between the cost of production and the Maximum Retail Price (MRP) is paid to manufacturers.
According to the industry, the annual demand for urea in the country is around 28 million tonne, of which 22 million tonne is indigenously produced and the rest is imported.
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