The government has initiated measures to curb diversion of around one million tonne of agriculture grade urea annually to industrial uses which has resulted in subsidy diversion of Rs 6,000 crore, an official said on Tuesday.
The government provides urea at a highly subsidised rate of Rs 266 per bag (of 45 kg) to farmers, while it bears a subsidy of more than Rs 2,700 per bag.
According to an official of the ministry of chemicals and fertilisers, there is an annual requirement of around 1.3 – 1.4 million tonne of technical-grade urea for industrial usage, against a domestic production of around 150,000 tonne. The industry imports only 200,000 tonne, as against the required level of more than a million tonne.
“Around a million tone of agriculture-grade urea is getting diverted annually,” the official said.
A countrywide crackdown against units has been initiated by the department of fertilisers in collaboration with states.
Urea is used in various industries such as resin, glue, plywood, crockery, moulding powder, cattle feed, dairy and industrial mining explosives.
The agriculture-grade urea is neem-coated while technical-grade urea is not. The neem-coating is removed through some chemical process and then the urea is used for industrial purposes, an official said.
Country’s annual demand of urea is around 35 MT of which 26 MT is domestically produced while the rest is imported.
The government’s annual fertiliser subsidy bill is likely to be around Rs 2.3 trillion during this fiscal because of high international prices.
Earlier, chemicals and fertilisers minister Mansukh Mandaviya had stated that the government would not pass on the burden of rise in global prices to farmers.