De-controlled fertilizers production to increase with budget allocations

HYDERABAD: The production of decontrolled fertilizers namely diammonium phosphate (DAP), muriate of potash and single superphosphate (SSP), is expected to get a further boost with the Union Budget raising allocation towards the nutrient-based subsidy, says rating agency Care Ratings.

The subsidy was increased from Rs 20,232 crore in FY 2017-18 to Rs 25,090.35 crore for FY 2018-19.

Resultantly, this is expected to increase the share of decontrolled fertilizers in the overall fertilizer production to 45% from 40% earlier over the next two to three years. Urea currently accounts for 60% of the overall fertilizer production.

Urvisha H. Jagasheth, research analyst with Care Ratings, said the increase in nutrient based subsidy for decontrolled fertilizers by 24% will help augment further production of decontrolled fertilizers. Also, the increase in minimum support price for the Kharif crop will lead to higher usage of fertilizers".

The fertilizer industry received Rs 70,079.85 crore as subsidies where Rs 44,989.50 crore is earmarked as the urea subsidy while the remaining Rs 25090.35 crore is allotted for the nutrient-based subsidies.

Further, with the increase in minimum support price for crops to the extent of 1.5 times of the production is also expected to help fertilizer production.

Also, "by encouraging the cultivation of horticulture crops by development of infrastructure for horticulture, the consumption of DAP is expected to further go up," Jagasheth added.