NEW DELHI: India could save about $1.8 billion on fertiliser subsidies this year thanks to low energy prices but Prime Minister Narendra Modi’s government, two sources said, has no plans to remove price controls, a reform that would risk angering farmers.

Industry groups had hoped that the reform-minded Modi would use the opportunity presented by lower prices to free up the fertiliser market, as he did with diesel a year ago.

But stung by opposition to his reforms, including the defeat of a pro-industry land reform that opponents said was damaging for farmers, Modi is now more cautious of angering rural voters.

About two thirds of India’s population live in the countryside, and the prime minister is currently campaigning in the large rural state of Bihar, where assembly elections are due in a few weeks.

“Currently, there is no plan to raise urea prices, possibly for the next few years,” a senior official at the fertiliser ministry, with direct knowledge of policy issues, told Reuters.

He said falls in naphtha and gas prices would likely reduce the fertiliser subsidy bill to 600 billion rupees ($9.1bn) this fiscal year, about 18 per cent below last year.—Reuters

Published in Dawn, September 5th, 2015

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