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i) Introduction
of the Scheme:
The price, distribution and movement
of phosphatic and potassic fertilizers which were under
the Retention Price cum Subsidy Scheme since November
1977, were decontrolled in August'92 on the recommendations
of the Joint Parliamentary Committee on Fertilizer Pricing.
After decontrol there was a steep hike in prices of
P&K fertilizers. The Government, apprehending a
drop in consumption and to enable availability of decontrolled
phosphatic and potassic (P&K) fertilizers at reasonable
prices, introduced a Scheme of Concession on sale of
decontrolled P&K fertilizers in 1992-93, and announced
concession on DAP and MOP.
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ii) Evolution of
the Scheme:
The scale and coverage of the special
concession has been substantially increased to give
impetus to the stagnating demand for these fertilizers
and to ameliorate the nutrient imbalance in the soil
which is essential for sustaining the desired growth
in agricultural productivity. Immediately after the
decontrol of phosphatic and potassic fertilizers in
August, 1992, the Government announced an adhoc concession
(subsidy) of Rs.1000 on DAP and MOP and commensurately
on complex fertilizers w.e.f Rabi'92-93. Respective
State/UT Governments indicated the Maximum Retail Prices
(MRP). The State/UT Governments disbursed the payment
of concession up to 1993-94 from grants-in-aid received
from from the Central Government for this purpose. The
impact of these rates of concession on increased prices
of fertilizers was, however, nullified gradually by
the increase in prices of inputs as well as the dollar-rupee
parity. In order to improve consumption of phosphatic
and potassic fertilizers for improving nutrient balance,
Government enhanced the rate of concession on indigenous
DAP from Rs.1000 per MT to Rs.3000 per MT and fixed
a concession of Rs.1500 per MT for imported DAP in July
1996. Besides, the concession on MOP was also enhanced
to Rs.1500 per MT and commensurately on complexes. The
scope and method of implementation of the Scheme has
been undergoing experience based evolution, which is
reflected in revised guidelines being issued by Government
of India from time to time.
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iii) Implementation
by the Central Government:
There is no unit-wise or importer wise
recognition of costs under the Concession Scheme; only
industry level average cost of sales is taken into account.
Accordingly, concession rate is determined separately
for DAP, MOP and each grade of potassic and phosphatic
fertilizer . For each decontrolled fertilizer, the Maximum
Retail Price (MRP) is indicated by Central Government
except for Single Super Phosphate, the MRP of which
is indicated by each State/UT Government Generally,
the difference between cost of sales and MRP forms the
element of concession.. Payment of 80% 'on account'
concession claim (enhanced w.e.f.1.4.2001 to 85% or
90%, if supported by Bank Guarantee applicable to manufacturers
of P&K fertilizers only) is made on the basis of
sales certified by Statutory Auditors. Imports of DAP/MOP
are eligible to claim 80% 'on account payment The balance
20% (15% or 10%) is to be paid after the sales have
been certified by the States. In order to avail of concession
under the Scheme, the manufacturers/importers are required
to sell the decontrolled fertilizers at the applicable
MRP. Single window system for preliminary examination
of claims has been introduced to expedite payments.
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iv) Transfer of
scheme to Department of Fertilizers:
From 1.10.2000, the responsibility
of the administration of the Scheme has been transferred
from Department of Agriculture & Cooperation to
the Department of Fertilizers. Subsequent to transfer
of Concession Scheme to Department of Fertilisers sustained
efforts are being made to streamline the procedures
for implementation of the Scheme. Towards this end national
level consultations were held in February 2001 and a
one day Workshop was held on Concession Scheme in October
2001 with a view to receive views/suggestions of fertilizer
sector in the matter of implementation of the Scheme.
A half day conference was also held with Fertilizer
Association of India (FAI) and SSP manufacturers on
12.11.02. The above interaction has lad to modification
reflected in guidelines for the Concession Scheme issued
on 9.10.2000, 17.5.2001
& 5.8.2002. The
constitution of Technical Audit & Inspection Cell
and specified grades of rock alongwith origin/source
of procurement notified for use by SSP industry, are
some of the features introduced by the DOF.
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