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March 1, 2000
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Fertilisers
Overall impact: Neutral
Neutral features
- The maximum retail price (MRP) of urea has been raised by 15 per cent so as to compensate the rising cost of inputs.
- The MRPs of Di-ammonium phosphate (DAP) and muriate of potash (MOP) have been raised by 7 per cent & 15 per cent respectively.
- In Budget 2000, while aiming at agricultural development, the government has planned to rationalise the Retention Pricing Scheme and cap capital related charges. This is expected to force fertiliser units operating below 100 per cent capacity to improve their operating efficiencies. However capping of capital related charges may be detrimental to units which are operating beyond their 100 per cent capacities.
- The phased removal of Retention Price Scheme is likely to highlight the weaknesses of inefficient units which will suddenly find their safety net disappearing.
Negative features
- The total Non-Plan Expenditure on fertiliser subsidies is budgeted at Rs 126.51 billion in 2000-01 against Rs 132.5 billion in 1999-2000.
- Countervailing duty on imports for setting up, expanding, renovating or modernising fertiliser plants has been increased from 10 per cent to 16 per cent which is likely to increase the cost of capital investment.
ALSO SEE:
BUDGET IMPACT
The first cut
A matter of life and debt
On the MAT
How will your tax outgo change?
SECTOR IMPACT:
PRELUDE TO THE BUDGET
What will Yashwant Sinha do?
How will personal taxes change?
Fiscal report card
PRE-BUDGET SECTOR ANALYSIS:
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