Fertiliser Sector

Budget Proposals

• Nutrient Based Subsidy (NBS) has improved the availability of fertilisers; the Government is actively considering extension of the NBS regime to cover urea.
• Government to move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers.
• Capital investment in fertiliser production proposed to be included as an infrastructure sub-sector.
• Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers.
• Fertiliser subsidy seen at Rs 500 billion in FY12 as against Rs 550 billion in FY11.

Budget Impact

• The new policy on providing subsidies on fertilisers on the basis of their nutrient composition could soon be extended to urea which is one of the most widely used fertilisers. 
• The nutrient-based subsidy (NBS) system is expected to increase agricultural productivity in the country through higher usage of secondary and micro nutrients. 
• New innovative fertiliser products are expected to be developed subsequently under the NBS regime to meet the different requirements of Indian agriculture.
• It is proposed in the budget to include capital investment in the fertiliser sector as an infrastructure sub0-sector and this is likely to act as a positive for the sector which will eventually result in a higher farm output.
• The proposal by the government to directly transfer cash subsidy to people below poverty line in a phased manner will ensure better delivery of Kerosene, LPG and fertilisers to these people. It is also proposed to set up a task force to work out the moralities for the proposed system which is likely to streamline the process and benefit the end users in future.