On May 13, 2015, the government approved a so called ‘Comprehensive new urea policy’ which seeks to (i) promote energy efficiency; (ii) maximize indigenous urea production and (iii) reduce subsidy burden on the budget. At present, under the new pricing scheme (NPS) in vogue since 2003, each of the 30 urea manufacturing units gets a retention price (or ex-factory price) based on production cost specific to it. Since, all of them are required to sell urea at ‘uniform’ controlled price which is lower, the difference is reimbursed as subsidy. Initially, NPS was designed as a group-based uniform pricing scheme whereby each unit in a given group [6 groups were carved out depending on feedstock and vintage based on recommendation of expenditure reforms commission (ERC) in 2000] was to get the same subsidy/concession amount. This was mooted as a bridge leading to eventual decontrol of urea and poor farmers getting direct … Continue reading New urea policy – rocks reforms boat