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Urea decontrol debate
What it is
The long-running argument over whether to free urea from statutory price control. Its MRP has been fixed near Rs 242 per 45 kg bag since 2012 against a production cost well above Rs 35,000 a tonne, with the gap met by subsidy
Urea alone absorbs roughly Rs 1.19 lakh cr of a ~Rs 1.68 lakh cr fertiliser subsidy, and sits outside the NBS framework that governs phosphatic and potassic nutrients
Impact on industries
- The distortion drives agronomic damage - cheap nitrogen against costlier P and K has pushed the NPK ratio to ~11:4:1 against an ideal near 4:2:1
- Import dependence compounds it - India imports ~a quarter of urea demand and ~85% of the gas for the rest, so a controlled price sits on two global exposures
- Decontrol would restore pricing power and let efficiency differences show in margin rather than be absorbed by subsidy reimbursement
- Political feasibility is the binding constraint, not economics - farm-policy reform has met strong resistance, so the debate recurs each budget without resolution