The government on Monday sought to shift to a nutrient-based subsidy regime to facilitate balanced use of fertilisers and bring in fresh investment to the sector.
Presenting the Budget 2009-10, Finance Minister Pranab Mukherjee said, "To ensure balanced applications of fertilisers, the government intends to move towards a nutrient-based subsidy regime instead of the current product pricing regime."
The move will result in the supply of "innovative fertiliser products in the market at reasonable prices", the Finance Minister observed.
The unshackling of the fertiliser-manufacturing sector is expected to attract fresh investment to the segment that has not witnessed any significant inflow of funds, Mukherjee said.
At present, the government controls the pricing of key fertilisers and offers funds to companies as fertiliser subsidy to compensate them for selling key farm nutrients at the rates determined by it.
Moreover, the government aims to provide subsidy directly to farmers instead of companies that sell them.
"In due course, it is also intended to move to a system of direct transfer of subsidy to the farmers," Mukherjee said.