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The Cabinet Committee on Economic Affairs (CCEA), which met on Thursday, also approved a uniform nutrient subsidy policy to encourage farmers to use nutrient-based organic instead of regular nutrient like urea and DAP.
Announcing the CCEA decision, Finance Minister P Chidambaram said that the decision to provide subsidy for nutrients contained in all fertilisers would bring down the prices of several complex fertilisers. "The prices of complex fertilisers will come down by Rs 1,416 per tonne or Rs 70 per bag," Chidambaram said.
The complex fertilisers are those which have at least two nutrients, while regular fertilisers have only one nutrient, like nitrogen (N), phosphorous (P) or potash (K).
The uniform freight subsidy scheme, which is based on the payment of actual freight, Chidambaram said, would ensure easier availability of fertiliser in all parts of the country. Currently, fertiliser companies receive a fixed amount as freight irrespective of distance from the production centre to the sale point. The industry for long had been demanding payment of actual freight. Replying to questions on shortage of fertilisers, he said, "The ministry of fertilisers assures us that there is no shortage. Adequate fertilisers are available and being provided." The states, he added, should ensure that there are no movement bottlenecks.
The policy announcement saw the stock prices of fertiliser companies like Rashtriya Chemicals and Fertilisers, National Fertilisers, Coromandel Fertilisers and Chambal Fertilisers rise at the BSE on Thursday.
Govt raises paddy MSP to Rs 850 for FY09
The government has raised the minimum support price (MSP) of common variety paddy for the 2008-09 kharif procurement season (October-September) by Rs 105 a quintal to Rs 850 as an adhoc measure, while leaving the final decision on the CACP- recommended price of Rs 1,000 to the Prime Minister's Economic Advisory Council (EAC).
The Commission for Agricultural Costs and Prices (CACP) is the advisory body on fixing the MSP for all the crops. The MSP of common variety paddy was Rs 645 a quintal and Rs 675 a quintal for higher-grade variety in 2007-08. A bonus of Rs 100 per quintal was offered over and above the MSP.
"Some states like Gujarat, Madhya Pradesh and Orissa wanted less than Rs 1,000 a quintal as MSP, while some others wanted more than that. In view of divergent views, the matter was today referred to the EAC," Finance Minister P Chidambaram said after a meeting of the Cabinet Committee on Economic Affairs.
In fact, Himachal Pradesh wanted the MSP for paddy to be Rs 645 a quintal, Rs 100 less than the current price of Rs 745 a quintal, he added. For 'A' (higher) variety of paddy, CACP has recommended Rs 1,050 a quintal against the present MSP of Rs 775. A decision on this would also be taken in a calibrated manner, the finance minister added.
A decision on MSP of other crops was not taken, as there was no urgency since their market prices are ruling high, he said. PM's EAC will have look at the entire recommendations of CACP and not just MSP for paddy, Chidambaram said. He said CACP recommendations altered in the past as well.
The minister said Left-ruled West Bengal and Kerala have not sent their inputs on CACP, while some states have asked for as high MSP as Rs 1,300 a quintal.
Chidambaram said MSP for common variety of paddy increased by Rs 60 a quintal from 1999-2000 to 2003-04, while it went up by Rs 195 during 2003-04 to 2007-08. "Farmers have been given good prices, which was reflected in production and procurement...but a Rs 255 hike would be very sharp rise," he said.
