Prices Will Shoot Up Further in India

The government has decided to hike the retail price of urea by 10 percent, and fertilizer manufacturers have been given the right to raise the prices of mixed fertilizers like KAP, MOP, and NPK, based on their nutrient content. Companies import chemicals according to the requirements of these fertilizers. Their prices will, therefore, depend on the rise and fall of prices in international market. The government has taken this step to reduce the burden of spiraling fertilizer subsidy bill caused by expensive imports.

Hike in Fertilizer Prices
The government justified its decision to hike fertilizer prices on the ground that prices of urea and other fertilizers had not been increased in the last 10 years. In addition to fallouts of this decision, prices will certainly shoot up, thereby increasing the burden of farmers and the common people. Expensive fertilizers will increase the cost of production of food grain. This, in turn, will increase their prices further.
Food products have already become quite expensive. They have gone up by almost 18 percent recently. The relief in prices with the harvesting of the Rabi crop in April is not likely to last long.
The rise in fertilizer prices seems to have dashed all government hopes to become self-sufficient in pulses. The decision to launch such a mission was made in view of the reduced availability of pulses in the country and the world. Maximum mixed fertilizers are used in production of pulses. This decision will, thereby give a jolt to the government's decision to increase production of pulses.

Subsidies to Farmers
The point to be noted here is that so far, the government has not implemented its decision to give farmers the direct benefit of fertilizer subsidy. Yet, at the same time, it has given fertilizer companies the liberty to fix prices on the pretext of nutrients.
Fertilizer manufacturers have been, for years, accused of gobbling up the part of subsidies that should go to farmers. The decision to hike fertilizer prices is also said to have been caused by pressure of the fertilizer manufacturers lobby.