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Kathmandu Sunday November 12, 2000 Kartik 27, 2057.
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Govt to resume urea subsidy
Post Report
KATHMANDU, Nov 11 - Bowing under intense pressure of
farmers, whose agro-products are unable to compete against cheap Indian products that are
flooding the domestic markets, the government has finally decided to resume subsidy on
fertilizers, which it had revoked last year.
The decision to revamp the subsidy was taken by the Cabinet
recently. However, the modality of granting subsidy this time differs than that from the
past. The Cabinet decided to grant full subsidy on interest on loans, which Agriculture
Input Corporation (AIC) would need to acquire from banks to finance its fertilizer
purchases. Formerly, the subsidy was given in fixed amounts at the time of fertilizer
imports.
However, the subsidy would be applicable for urea only and
the facility could be availed even by the private sector parties involved in fertilizer
imports. According to Nitya Raj Koirala, General Manager of AIC, the implementation of the
decision would bring down urea prices.
The price of urea supplied by AIC just before the complete
revocation of subsidy stood at Rs 740 per quintal, which today stands at Rs 894.
Furthermore, the price of urea imported by the private sector is even higher, well over Rs
1000 per quintal.
"The payment of bank interest by the government would
reduce the load factor on urea price and hence would bring it down," Koirala said
Saturday, talking to The Kathmandu Post. In addition, the Ministry of Agriculture is
contemplating to form a revolving fund of Rs 600 million from the next fiscal year for
meeting funds for purchases and to maintain a buffer stock of urea as per requirements.
The government, in accordance to its understanding reached
with Asian Development Bank (ADB), before the release of Second Program Loan under the
twenty-year Agriculture Perspective Plan, among others, had decided to revoke subsidy in
fertilizers phasewise and accordingly lifted it on December 1999.
ADB had pressured the government to remove subsidy on
fertilizers, and making credit available instead, assuring the government that a larger
mass of the population will be attracted to use fertilizers.
However, subsidy removal policy, which was also adopted in
the case of irrigation facilities, though partially, proved costly for farmers whose
produce could not compete against cheap Indian agro-products even in the local markets.
India still continues to grant subsidy in most agriculture
inputs, thereby rendering Nepalese agriculture output less competitive in the markets. It,
unlike Nepal, has even fixed a support price for ensuring right price for farmers’
produce. Furthermore, flooding imports of Indian agro-products into the Nepalese markets
pulled down domestic agro-prices drastically, which caused uproar among farmers.
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