Central government of India have announced their new fertilizer policy today on February 18, 2010. Government have allowed fertilizer companies to hike Urea price by 10 percent. Price hike will be effected from April 1, 2010. This is a pre-budget announcement. Budget of central government of India for year 2010-11 will come on February 28, 2010.
Urea price will rise to Rs.5310 from present 4810. Government have also allowed the companies to decide their own prices for nutrient grade fertilizers. This announcement is aiming towards fresh investment in fertilizer industry.
Share prices of some fertilizer companies such as RFC, National fertilizers, Nagarjun fertilizers, Chambal fertilizers have surged today by approximately 2 percent on an average.
However, analysts say hike in price of urea will not benefit the fertilizer companies because Government will reduce subsidy by 10 percent. Government can save 13 billion on subsidy bills. It will neutralize the positive effect on fertilizer companies. Moreover, it will affect the farmers negatively and will fuel to price hike in agricultural products.
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