India reforms fertilizer pricing

Farms to gain:

INDIA: India eased controls on several fertilizers and raised prices of the popular urea nutrient by 10 percent on Thursday, raising hopes of more reforms, lower subsidies and higher margins for producers.

The government, facing protests against soaring food prices, has cautioned fertiliser firms that if prices rise sharply, it will re-impose controls to protect farmers as soil nutrients account for 30 percent of farming costs.

"The government has reserved the right to intervene, to protect the interests of farmers," Information and Broadcasting Minister Ambika Soni told reporters after the cabinet approved the policy, which will fix the subsidy for specific nutrients, replacing an ad hoc system.

Easing controls on the price of fertilizers other than urea will help the government cut fiscal deficit, which rose to 6.2 percent of GDP last year, partly because of fertiliser subsidy, which rose to 758.49 billion rupees ($16.4 billion) in 2008/09.

Fertiliser Secretary S.M. Krishnan said the subsidy in 2010/11 would not be higher than the previous year.

For a factbox on India's fertiliser sector see

Finance Minister Pranab Mukherjee, who will present the annual budget on Feb 26, is expected to lay down a roadmap for rationalising oil and fertiliser subsidies. NEW DELHI, Friday, Reuters