This letter is in response to a misrepresentation of the facts related to urea pricing in many newspapers. The structure or breakdown of the adjustment was based on (1) the government reduced and capped the price at Rs. 1,400 per bag of urea vide notification 23 of August 2016 under the subsidy scheme as follows: a) the price in June of 2016 was Rs. 1,790 b) a reduction of Rs. 50 by the manufactures and b) the impact of GST Reduction from 17% to 5% or Rs.184 d) with a subsidy of Rs. 156 offering a total reduction of Rs. 390 which brought the price tag after reduction to Rs. 1,400 per bag.
(2) The government revised the subsidy scheme through the Finance Bill 2017-18 and reduced the subsidy to Rs. 100 per bag, while keeping the price at Rs. 1,400, thereby implying that the manufacturers raise the price to Rs. 106 per bag. (3) The reduction of GST on urea from 5% to 2% in the Finance Bill 2018-19 and a withdrawal of the subsidy which led to the subsequent price increase of Rs. 52 per bag from July 1st 2018. (4) Upon termination of the subsidy on July 1st the manufacturers were to recover Rs. 106 plus pass on the impact of withdrawal of subsidy and GST adjustment (Rs.52). Thereby the price increase was to be Rs. 158 per bag.
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