The over consumption of urea and limited use of phosphatic and potassic (P&K) fertilisers need to be addressed through appropriate price incentives by reducing subsidies to ensure sustainable practises are encouraged, Economic Survey said today.

The Survey said production of key fertilisers like urea, DAP and complex fertilisers has not been satisfactory this fiscal and to tackle it, the government would encourage private investments in the sector to increase the indigenous capacities by long-term availability of gas.

"...Over-use of nitrogenous and limited use of P and K fertilisers are matters of great concern and need appropriate price incentives by reducing fertiliser subsidies so that sustainable practises are encouraged," the survey said.

However, it said fertiliser consumption has shown improvement as the policies for increasing availability and consumption of crop nutrients at affordable prices in the country have been successful.

On the production of fertilisers, it said urea output is pegged to rise by only one lakh tonne, while that of di-ammonium phosphate (DAP) is expected to decline by 2.5 lakh tonnes. The output of complex fertilisers is also pegged to rise by 1.7 lakh tonnes.

India's urea production is estimated at 22.38 million tonnes this fiscal against 21.98 million tonnes in the 2011-12 fiscal.

The production of DAP and complex fertilisers is seen at 3.71 million tonnes and 7.94 million tonnes in the 2012-13 financial year, respectively. India produced 3.96 million tonnes and 7.70 million tonnes of DAP and complexes in the last fiscal, respectively.

To counter the shortfall in fertiliser production, the government is banking on its New Investment Policy (NIP) 2012.

Under the NIP, the government will encourage investments in the urea sector, which would increase indigenous capacity and reduce dependency on imports.

Under the policy, the government has also made provisions for long-term availability of gas for new fertiliser projects.

"It is expected that fresh investment will come for expansion, revival, and setting up of brownfield and greenfield projects," the Survey said.

India meets its entire requirement of muriate of potash (MOP), 90 per cent of di-ammonium phosphate (DAP) and 20 per cent of urea through imports.