2.1  A production target of 113.00 lakh tonnes of fertilizer nutrients was fixed for the year 1995-96, comprising 86.33 lakh tonnes of nitrogen and 26.67 lakh tonnes of phosphate. This represented a growth rate of 8.6% in nitrogen and 7% in phosphate production over the production of 79.45 lakh tonnes of nitrogen and 24.93 lakh tonnes of phosphate recorded during 1994-95.

2.2 The actual production during 1995-96 was 87.77 lakh tonnes of nitrogen and 25.58 lakh tonnes of phosphate. There was an increase of 10,5% in the production of nitrogen and 2.6% in phosphate. The production of nitrogen exceeded the target, while there was a shortfall in the production of phosphate. The steep price rise on account of the higher costs of imported raw materials and intermediates due to a slide in the value of the rupee led to a demand stagnation, besides a shift in consumption from high nutrient phosphate fertilizers like DAP to low nutrient complex fertilizers and SSP, with consequential adverse effect on crop yields.

2.3 The new gas-based plant of M/s. Oswal Chemicals & Fertilizers Ltd., at Shahjahanpur in Uttar Pradesh with a capacity of 7.26 lakh tonnes of urea per annum started commercial production on 28th December, 1995.

2.4 Currently, 8 major projects are under implementation at Aonla & Phulpur [U.P.], Vijaipur [M.P.], Kalol [Gujarat], Manali [near Madras], Cochin [Kerala], Kakinada [A.P.] and Babrala (U.P) involving an estimated capital cost of Rs. 6578.59 crore. These projects will produce an additional 41.63 lakh tonnes per annum (MTPA) of urea and 1.84 lakh MTPA of NPK fertilizers.

2.5 lnspite of the critical financial position of FCI and HFC, the operations in the functional units of Sindri, Ramagundam & Talcher of FCI and Barauni, Durgapur and Namrup of HFC were sustained during 1995-96. Adequate non-plan support (Rs. 192 crore to FCI and Rs.90 crore to HFC) was provided to supplement the cash flow of these sick companies. The revival packages for FCI and HFC are being revised from the view point of financial institutions to facilitate the funding of the revamp schemes.

2.6 Efforts have been stepped up to explore the possibility of setting up joint venture projects in countries with better resource endowments to meet the growing demand of fertilizers in the country. Apart from the project in Jordan for production of 2.24 lakh tonnes of phosphoric acid being jointly implemented by M/s. SPIC and Jordan Phosphate Mines Company Limited, a Memorandum of Understanding (MOU) has been signed on 30.7.1994 between Govt. of India/KRIBHCO/RCF and Oman Oil Company for setting up a gas based urea plant in Oman for production of 15 lakh tonnes of urea per annum. A Detailed Feasibility Report of the project is under preparation. Preliminary enquiries for setting up joint venture projects in Iran, Qatar, Vietnam, Syria and Tanzania are also being made.

2.7   Government of India has continued to supply urea to the formers at heavily subsidised prices. On an average, a subsidy burden of about Rs. 3430/- was borne by the Govt. on every tonne of urea, indigenous & imported, sold to the farmers during 1995-96. The. current farm gate price of urea [Ra.3320 per tonne] in India is amongst the lowest in the region. A special concession @ Rs. 1000/- per tonne on indigenous DAP and imported Potash is also being provided to the farmers, alongwith proportionate concession. on indigenous complex fertilizers and SSP. This scheme is being implemented by the Ministry of Agriculture.

2.8   The policy parameters for the Retention Price-cum-Subsidy (RPS) for the Sixth Pricing Period commencing 1.4.1991 have been approved for a duration of 6 years. The Seventh Pricing Period will commence on 1.4.1997.

2.9 The availability of urea which, at present, is the only fertilizer under price distribution and movement controls, remained satisfactory throughout the year. In both the crop seasons of Kharif 1995 and Rabi,1995-96, the allocations made under the Essential Commodities Act were fully met. The temporary and localised shortages experienced during the Kharif season in a few States on account of inadequacy of rakes and directional constraints were overcome by despatches from alternative sources of supply.

2.10 While Kharif 1995 witnessed brisk sales with a growth rate of 15% over the previous Kharif, the sales during Rabi 1995-96 were 8 to 10 lakh tonnes lass than estimated. The unexpected drop in sales during the season resulted in a build up of inventories and the closing stocks at the end of the Rabi 1995-96 touched a level of 25 lakh tonnes as compared to the usual closing stocks of 12-13 lakh tonnes in the last few years.

2.11 The demand for phosphatic and potassic fertilizers during 1995-96 remained sluggish. In view of the increase in the sale of DAP and MOP during, 1994-95, there were heavy imports during 1995-96. This resulted in an inventory build-up as the consumption did not increase correspondingly.