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    Urea consumption, imports and subsidy likely to rise this year

    Synopsis

    Consumption of urea is directly related to subsidy burden on the government, which provides for over 70% on the cost of urea. The government has estimated subsidy of Rs 48,000 crore on urea for 2020-21.

    NEW DELHI: Urea consumption is likely to rise 10% to a record 37 million tonnes this year as famers are using more nutrients in the expanded crop area after good monsoon rainfall. Consumption in the Rabi season is expected to be 19 million tonnes, officials said.

    “We imported 9.12 million tonnes urea last year - 22% more than 2018-19. This year imports may touch a record level of 13 million tonnes - 42% more than last year,” said a senior fertiliser ministry official.

    The official said that in 2018-19, consumption of urea had risen 5.3% to 32.02. The growth rate is now expected to double.

    “Domestic production of urea has been in the range of 23-24.5 million in last few years. The gap is filled with imports, which has been on rise. Good monsoon pushes sales of urea, which accounts for 60% of the total fertiliser consumption in the country,” the official said.

    Consumption of urea is directly related to subsidy burden on the government, which provides for over 70% on the cost of urea. The government has estimated subsidy of Rs 48,000 crore on urea for 2020-21.

    “The subsidy amount is likely to breach the budget estimates as there would be record consumption of urea along with record imports. In the current fiscal, the unpaid subsidy has already crossed Rs 25,000 crore and by the end of this fiscal the subsidy burden is likely to reach Rs 55,000 crore,” the official said.

    The industry is also worried about the urea subsidy arrears, which is hampering the capital investment in running urea plants. However, it is finding some solace in the categorisation of fertiliser under category A of finance ministry which has enabled department of fertiliser to spend 100 per cent of the budgeted amount without any quarterly or monthly restriction on disbursal of funds.

    “It’s a welcome step. Earlier department of fertiliser fell under category B, which meant that only 80% of the budget fund was available to fertiliser ministry along with disbursal restriction. It was hampering the money flow. Now, things have improved. However, we expect allocation of some additional fund which can take care of our subsidy arrears,” said Satish Chander, director general of Fertiliser Association of India (FAI), an industry body.

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