UREA PRICE HIKE DEFERRED
The government which is already paralysed neck down has done it once again. On Thursday the issue of Urea pricing was again referred back to the Group of Ministers who of course might take some time before arriving at some kind of a resolution on the same. Urea is a regulated fertiliser with current retail price at `5310/tonne. The last revision in urea prices happened in 2010 when they were raised to Rs 5,310/tonne from Rs 4,830. Complex fertilisers such as DAP and MoP which were decontrolled some time ago have been showing a sharp rise in prices due to supply side conditions and the steep INR depreciation in recent months, thereby boosting the demand even further for urea as a cheaper alternative. The 10% price hike was not expected to change the fortunes of the beleaguered fertiliser sector but was seen as an signal that the government is serious about pushing reforms through in the form of an eventual urea de-regulation. According to analysts a 10% hike in urea could have resulted in the PBT for Urea manufacturers Rashtriya Chemicals and Chambal Fertiliser going up only by `50-60 crore. The proposal to hike urea prices was made to redress the imbalanced use of soil nutrient and reduce the subsidy burden of the government which has been pegged at close to 65000 crore this fiscal.
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