Hike in rail freight to affect govt's fertiliser subsidy bill

Tags: News
Government's fertiliser subsidy bill will increase in the wake of a hike in freight rate by the railways on crop nutrients.

The government has pegged subsidy on fertilisers for 2012-13 at about Rs 61,000 crore, which includes Rs 13,398 crore for imported urea, Rs 19,000 crore for indigenous (urea) fertilisers and Rs 28,576 crore for decontrolled phosphatic and potassic (P&K) fertilisers.

Railway freight rate was today hiked by nearly 6 per cent across the board. For example urea, a major fertiliser, the rate has been raised to Rs 920 per tonne from Rs 869.60 per tonne.

"The maximum retail price of fertilisers will not rise as the government absorbs the primary freight charges, which is through railways. In this case the manufacturers will give the higher bill to the government, who will reimburse it. This will lead to a rise in freight subsidy bill," Fertiliser Association of India Director General Satish Chander told PTI.

On an average, India consumes about 30 million tonnes of urea and around 25-26 million tonnes of DAP, MoP and complex fertilisers annually.

The government provides subsidy to fertilisers companies for transportation of these crop nutrients, as per three components.

The movement of fertilisers from port or plant by rail to various rake points is called 'primary movement' and the cost is reimbursed on the basis of railway receipts.

'Secondary movement' is the transportation of fertilisers from the railway rake points to the district headquarters, which was around Rs 300 per tonne and which the government has now scrapped with effect from April 1, 2012.

However, the government will be providing freight subsidy on direct road movement of P&K fertilisers from plant or port to the district headquarters (except single super phosphate) as per actual distance subject to maximum distance of 500 km.

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