Fertiliser subsidy restored on PM's directive

Govt had withdrawn cash subsidy of Rs156 per bag of urea earlier this week


Our Correspondent January 13, 2017
PHOTO: FILE

ISLAMABAD: Prime Minister Nawaz Sharif has directed that cash subsidy on urea sales should be restored in order to provide relief to the agricultural sector.

The government had allocated Rs28 billion in cash subsidy on fertiliser sales, but it was discontinued earlier in the week after the entire amount was consumed.

In a statement issued on Friday, the prime minister said the agricultural sector was the backbone of economy that contributed to the country's GDP growth, therefore, the sector should be facilitated. Provinces and the federal government will equally share the subsidy.

Govt withdraws cash subsidy on fertiliser sales

However, the government had not withdrawn the General Sales Tax (GST) subsidy on fertiliser amounting to Rs184 per 50kg bag of urea. Under this subsidy, it has reduced sales tax from 17% to 5%.

Overall, the government had announced a subsidy of Rs390 per bag of urea in the budget for 2016-17 including cash subsidy of Rs156, GST subsidy of Rs184 and price reduction of Rs50 by the manufacturers.

The price of urea had gone down from Rs1,790 to Rs1,400 per bag following announcement of the subsidy.

Facilitating farmers: Food ministry for continuing fertiliser subsidy next year as well

The government had also withdrawn cash subsidy of Rs300 per bag for di-ammonium phosphate (DAP). The DAP price had gone down from Rs2,800 to Rs2,500 per bag after the announcement of the subsidy.

The agriculture sector was already suffering and withdrawal of the cash subsidy on fertilisers would have further hit it hard.

In financial year 2016, the performance of the agricultural sector, as a whole, remained dismal as it recorded a negative growth of 0.19% against 2.53% growth a year earlier.

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