Fertiliser ministry officials on Monday briefed the new minister Ram Vilas Paswan about the pending decision on increasing subsidy on phosphatic fertilisers by upto Rs 1,000 crore (Rs 10 billion) to keep a check on domestic prices.
Subsidy on phosphatic fertilisers is already over Rs 5,000 crore (Rs 50 billion) and more than 20 per cent price hike has been necessitated in view of the near complete dependence on imported phsophoric acid and potash whose prices have skyrocketed.
Even before Paswan formally assumed charge, ministry officials including fertilisers secretary told him about the impending need for increasing concessions for units manufacturing phosphatic fertilisers.
"We have told him that a large part of the hike in international raw material prices has to be absorbed by way of subsidy. Finance ministry needs to be convinced about this," one of the officials told PTI.
He said every one-dollar increase in world prices of phosphoric acid and potash translates into a subsidy of Rs 9 crore (Rs 90 million). Phosphoric acid forms 65 per cent component of the DAP fertilisers and its prices this season have increased to $460 a tonne from $356 a tonne.
Indian buyers after hectic negotiations with the selling cartel, mostly from Morocco, managed to get the price reduced to $402 a tonne.
India is world's largest consumer of phosphoric acid.
Potash imports are canalised mostly from Central Asia through Indian Potash Limited and its prices shot up to $185 from $124 a tonne. With great difficulty the offer price was cut to $182 dollars a tonne.