The substantially higher subsidy bill is a part of the strategy of the government to safeguard farmers from sharp price spiral for both raw materials and finished fertilisers in the global market.
Fertiliser shares had risen in a weak market yesterday, 27 May 2008, when the news of higher subsidy hit the market during trading hours. On that day, Nagarjuna Fertilisers and Chemicals rose 2.36% to Rs 45.55, Rashtriya Chemicals and Fertilisers gained 1.04% to Rs 67.90, and Chambal Fertilisers and Chemicals jumped 6.85% to Rs 76.40
Meanwhile, the government’s new fertiliser investment policy is likely to be finalised in the next two to three weeks. The new policy will aim at linking production cost of new fertiliser units to the international prices, in order to encourage fresh investments in the sector.