A PHASED DE-CONTROL
OF THE FERTILIZER INDUSTRY, A SUSTAINABLE PRICING POLICY, ETC.
ARE THE MAIN OBJECTIVES OF THE GOVERNMENT IN THE TENTH FIVE YEAR
PLAN
THE
MINISTER OF CHEMICALS AND FERTILIZERS EMPHASISES THE NEED TO RESTRUCTURE
THE INDUSTRY TO BE GLOBALLY PRICE COMPETITIVE
PARAMETERS
FOR SEVENTH AND EIGHTH PRICING PERIODS ANNOUNCED
THE
SUPPLY POSITION OF MAJOR FERTILIZERS COMFORTABLE FOR THE CURRENT
KHARIF SEASON
The Government proposes to achieve a phased de-control
of the fertilizer industry, establish a sustainable pricing policy
and deal with closer/rehabilitation of sick and unviable fertilizer
units.
Addressing the Members of Parliamentary Consultative
Committee, the Minister for Chemicals and Fertilizers Shri S.S.
Dhindsa said the objective is to prepare the fertilizer industry
to face challenges of global competition.
2. Speaking on "production and availability of
fertilizers with reference to Tenth Five Year Plan" Shri Dhindsa
said that the industry is currently witnessing a phase of uncertainty
in some of the critical issues like pricing policy for urea, de-control
of phosphatic and pottassic fertilizers, and the issue of unviable
and sick public sector undertakings and disinvestment and therefore,
there is a need to restructure and revamp the fertilizer industry.
He said as per the Working Group Report on Tenth
Five Year Plan, the production strategy of increasing the chemical
fertilizers production during this Plan period will be determined
by impending pricing policy for urea, firm availability of LNG
in the context of dwindling supply of domestic natural gas and
pricing of LNG affecting the viability of the project and the
impact of liberalization of imports in the post-WTO regime.
3. The fertilizer industry has flourished under
the protected umbrella of regulatory pricing regime governing
Retention Price-cum-Subsidy Scheme (RPS) for urea and Concession
Scheme for decontrolled fertilizers. He said while RPS and Concession
Schemes have worked extremely well in enhancing the production
capacity of fertilizers but these are imposing heavy financial
burden. He said Government has come under increasing pressure
to curtail expenditure on subsidy and concession extended to fertilizer
industry. The Minister said the Government has recently re-assessed
the capacity of urea units, tightened the consumption norms and
increase the level of capacity utilization for computing retention
price for urea units.
4. The Minister emphasised the need to restructure
and reform the fertilizer industry to be price competitive and
efficient to the international level. The Government’s aim is
to do restructuring in such a way that the industry becomes globally
efficient and at the same time the indigenous capacity is not
adversely effected.
He informed the Members that the Government is
in the process of formulating long-term pricing policy for urea
units based on the recommendations of the Expenditure Reforms
Commission. The Expenditure Reforms Commission has recommended
replacement of unit-wise Retention of Price Scheme with Group
Concession Scheme. The matter is under consideration of the Group
of Ministers the Minister added. Shri Dhindsa announced that the
policy parameters for the 7th and 8th Pricing
Periods beyond 1.7.97 have been finalised. The Seventh Pricing
Period will cover the period from 1.7.97 to 31.3.2000 and the
Eighth Pricing Period from 1.4.2000 to 31.3.2003.
5. Deliberating on the fertilizer availability
position in the country the Minister of Chemicals and Fertilizers
said it has been very comfortable in recent years. During 2001-2002
the total consumption of urea was estimated to be over 201 lakh
MT as compared to 192 lakh MT in 2000-2001 registering a growth
of about 5%. Similarly, in case of DAP and MOP after registering
a growth of 5.4% and 10.9%, the consumption level was to the tune
of 62 lakh MT and 20.3 lakh MT respectively in 2001-02. As regards,
current Kharif season, the supply position of major fertilizers
is very comfortable vis-à-vis their assessed demand in
all the States. The Ministry is continuously monitoring the state-wise
position of stocks availability of these fertilizers.
6. The Minister said the policy of the Government
has been not only to achieve maximum possible degree of self-sufficiency
in production of nitrogenous and Phosphatic fertilizers but also
to ensure their availability to farmers at reasonable rates by
fixing uniform prices through out the country. With a small beginning
of 30,000 MTs of production of nitrogen and phosphate at the time
of independence, India today has become the third largest producer
in the world by producing about 146 lakh MT of N & P in nutrient
terms. He said India has achieved near self-sufficiency in case
of urea. Similarly, in DAP, its installed capacity now matches
almost with our domestic demand. However, in case of potash the
country will continue to depend on import in the absence of any
viable source of production.
7. Md. Anwarul Haque, Shri Dipankar Mukherjee,
Shri Drupad Bargohain, Shri Mahendra Prasad and Shri Manoj Bhattacharya
MPs attended the meeting.
