Just as the last fiscal year ended, March 31, the Indian Cabinet Committee on Economic Affairs fixed subsidy rates for the new fiscal year.
The subsidy for potash and phosphate go down, 20 and 9 percent, respectively, while nitrogen and sulfur go up, 20 percent and 1 percent, respectively.
Phosphates: Rs11.997/kg, down from Rs13.241/kg (US$185.10/mt and US$204.32/mt)
Potash: Rs12.395/kg, from Rs15.47/kg (US$191.61/mt and US$238.71/mt)
Nitrogen: Rs18.898, up from Rs15.854 (US$291.61/mt and US$244.64)
The changes in subsidy payments is expected to save the government about US$130 million because P&K consumption is expected to stay the same as last year, about 28 million tons.
The government also announced it will change the way it pays urea subsidies beginning in June.
At present, the government pays manufacturers the difference between the production price and the subsidized price of Rs5,360/mt (US$82.71/mt) when the urea is delivered to a railhead or other distribution center. The new plan will pay manufacturers based on actual sales to farmers with information gathered from specialized point-of-sale machines.
The government wants the machines installed in the 200,000 distribution centers in the country by the end of May. The change is expected to reduce illegal diversion of subsidized urea to industries such as textiles and plywood.
In the end, the government wants to move to payment of subsidies directly to farmers via the POS machines by the next fiscal year.