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Ditching the fertilizer subsidy


After elections, how would it be to let go of the full fertilizer subsidy? If I recall right, the fert. subsidy bill was greater than 100,000 cr. – paid in bonds to fertilizer companies to make up for revenue shortfalls due to the fixed selling prices and rising costs.

If crude prices have mellowed (helps cut costs) and gas goes direct to fertilizer plans through Reliance, the subsidy may not be required. In fact, post elections, if we raise fertilizer prices a bit, we could cut the subsidy down to 25K cr. Which should reduce government borrowing by 75K crore. That is about 1.5% of our GDP.

It will take political will, but it might be a plan to reduce the deficit. Thoughts?


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