constituted - of Planning Commission

to keep the overall expenditure under the estimated level, Government has takencertain decisions to control the growth of expenditure on subsidies and otherrelated items. The decision of the Government to move towards nutrient basedsubsidy (NBS) regime in fertilizer subsidy along with increase in the MRP ofurea have helped in containing expenditure on fertilizer subsidy during 2010-11when compared to 2009-10. At the same time, NBS regime is also expected topromote balanced use of fertilizer with increase in agricultural productivity.Unshackling of fertilizer industry is also expected to attract fresh investments inthis sector. Based on successful introduction of NBS policy for other fertilizersexcept urea, Government is actively considering the extension of NBS regimeto cover urea as well. It is also proposed to encourage the use of bio andorganic fertilizers to reduce reliance on imported fertilizers.The Department of Fertilizer’s projections to the Group were based on acorrection of the 2011-12 BE figures from `49,998 crore to `84,844 crorestating that while finalizing the budget proposals for 2011-12, Department ofFertilizer had projected a requirement of `76,605 crore (gross) based onassumptions with regard to cost of fertilizers and estimated sales but this wasnot provided. For P&K fertilizers, NBS rates of 2010-11 were adopted. As, theprices of fertilizers in the international market have gone up and based oncurrent rates of subsidy announced, fund requirement for fertilizer subsidy wasprojected at `84,844 crore in 2011-12 by Department of Fertilizer and thereaftera 5 per cent growth is projected during the Twelfth Plan Period.However, keeping in view the points made in the Statements placed with theBudget 2011-12 under the FRBM Act, the Group felt that there was scope forrationalization of fertilizer subsidy in view of the introduction of the NBSregime including that on urea. The Group, therefore, took the base as thefertilizer subsidy expenditure in 2010-11 i.e `63,000 crore (net) and assumed aWorking Group Report on Centre’s Financial ResourcesPage-40