Modi Government Moves to Curb Fertiliser Prices
In a bid to align fertiliser prices in India with falling feedstock prices globally, the Fertiliser Ministry on Monday announced a cut of up to Rs 5,000 per tonne in retail prices.
Union Minister for Chemicals and Fertilisers, Ananth Kumar said, “Global cues have prompted the government to encourage fertiliser companies to lower prices. IPL (Indian Potash Limited), RCF (Rashtriya Chemicals & Fertilisers) and NFL (National Fertilisers) have agreed to lower prices.”
The ministry in a press statement stated that the price of DAP (Diammonium phosphate) has been reduced by Rs 2,500 per metric tonne, the price of MOP (Muriate of Potash) has been cut by Rs 5,000 per metric tonne while NPK (nitrogen, phosphorus and potassium) has been lowered by Rs 1,000 per tonne.
In order to ensure affordability for farmers, the government subsidises feedstock for companies through an annual budgetary allocation. This allows companies to sell fertilisers to farmers at a lower retail price. When asked whether this price cut would hinge on tweaking the subsidy allocation, Kumar said, “There would be no change in the subsidy outgo for the government with this price reduction.”
This move to cut prices has not positively impacted share prices of fertiliser companies as their margins may come under pressure. Shares of RCF closed 1.58 percent lower, NFL closed 0.14 percent lower, Gujarat State Fertilisers closed 0.51 percent lower, and Fertilisers & Chemicals Travancore closed 1.92 percent lower on the NSE. The benchmark Nifty 50 closed 0.51 percent higher.
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