The government has approved transportation of fertilisers through coastal shipping and inland waterways. This is a welcome move as it offers the possibility of significant reduction in freight cost, besides lesser time in reaching the material to consumption points and being environment friendly as well. It has also approved freight subsidy to manufacturers on the cost incurred on movement of fertilisers via this mode. In case of single mode or multi-modal transportation, which includes coastal shipping, ‘the freight subsidy will be restricted to railway charges or the actual freight incurred, whichever is less’. Further, ‘only movement of subsidised indigenous fertilisers, viz., urea and phosphate and potash fertilisers – through coastal shipping/inland waterways will be eligible for payment of freight subsidy...
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Category: Alternative policy scenario
Urea crisis – owes it to excessive controls
A major achievement of his government repeatedly cited by prime minister, N Modi is complete disappearance of the shortage and black-marketing of urea – the fertilizer that provides an overwhelming share of nitrogen or ‘N’ to the crops. Under the previous dispensations, farmers holding demonstrations to register their protest and lathi-charged by the police used to be an order of the day. The gruesome situation arose primarily due the diversion of substantial quantity over 30% to chemical industries. Modi made ‘neem coating’ of urea mandatory thereby rendering it unusable in chemical industries. This has helped in reining in diversion. The claim of the prime minister is borne out by facts on ground zero. During the last over 4.5 years, there...
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Urea dilemma – control versus decontrol
On the eve of its Annual Seminar [2018], the Fertiliser Association of India [FAI] – an umbrella organization of all fertilizer manufacturers/importers – has reiterated its demand for removing controls on the fertilizer industry. It has also asked the government to give subsidy directly to the farmers instead of routing it through the manufacturers as at present. In case however, the government continues with control and routing subsidy through the manufacturers then, it demands a fair deal in terms of admissibility of various elements of cost viz. fixed cost, feed/fuel and other costs under the New Pricing Scheme [NPS] for determining the subsidy amount to be reimbursed to them. Further, considering that the maximum retail price [MRP] of urea is...
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No relief in sight for fertiliser prices
India is overwhelmingly dependent on imports for meeting its requirements. That makes us vulnerable to the changing global demand-supply scenario. The Government, will, therefore, need to explore innovative ways to increase self-reliance Farm distress refuses to go away. This time around, the steep rise in prices of fertilisers — a key input used in crop production — during the current year has increased farmers’ miseries. During Kharif (April-September) 2018, the price of di-ammonium phosphate (DAP), a major source of phosphate or ‘P’ nutrient supply, increased by 30 per cent over Kharif (April-September) 2017. Likewise, the price of complexes and muriate of potash (MoP) — main source of ‘P’ and ‘potash’ or ‘K’ nutrient —increased by 15-60 per cent during Kharif 2018...
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Fertilizer tantrums, farmers’ woes
The woes of farmers refuse to go away. This time around, the steep increase in price of fertilizers – key input used in crop production – during the current year has increased their miseries. During Kharif [April-September] 2018, the price of di-ammonium phosphate [DAP] – a major source of ‘phosphate’ or ‘P’ nutrient supply – increased by 30% over Kharif [April-September] 2017. Likewise, the price of complexes and muriate of potash [MoP] – main source of ‘phosphate’ and ‘potash’ or ‘K’ nutrient – increased by 15-60% during Kharif 2018 over Kharif 2017. The escalating trend has continued during Rabi [October 2018-March 2019] season as well. The price of DAP has increased by a further 12-13% during Rabi [Oct 18-March 19]...
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Fertilizer subsidy payments assured within a week – a joke!
Considering the crucial role played by fertilizers in increasing food production and the overarching need to make it affordable to farmers, the union government has followed a policy of controlling their maximum retail price [MRP] at a low level unrelated to their cost of production and distribution which is higher. To ensure that production is viable at this price, it gives subsidy to the manufacturer to reimburse the difference between the two. The amount of reimbursement is known as subsidy. In case of urea, the subsidy varies from unit to unit and is administered under the New Pricing Scheme [NPS] whereas for decontrolled complex fertilizers, a ‘uniform’ subsidy fixed on per nutrient basis is given to all manufacturers under the...
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FLEDGLING FERTILISER REFORMS
Successive Governments have lamented an increase in fertiliser subsidy and its destabilising effect on the fiscal situation. Yet, they have failed to address the real issue The price of domestic gas has been increased from the existing $ 2.89 per million British thermal unit (mmBtu) on net calorific value basis to $3.06 per mmBtu for a six-month period beginning April 1. The hike, taking the price back to the level reached two years ago, has brought to the fore some niggling questions which successive ruling dispensations have dodged for several decades. First, who pays for the extra price that user industries — mainly fertilisers (besides power, CNG and PNG) — shell out? The urea industry alone requires over 45 million standard cubic...
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Rising gas price, fledgling fertilizer reform
The price of domestic gas is expected to go up from existing US$ 3.21 per million British thermal unit [mBtu] [on net calorific value basis] to US$ 3.40 per mBtu for six month period beginning April 1, 2018. The hike taking the price back to the level reached two years ago – has brought to the fore some niggling questions which successive ruling dispensations have dodged for several decades. First, who pays for the extra price that user industries – mainly fertilizers [besides power, CNG and PNG] – shell out? The urea industry alone requires over 45 million standard cubic meter [mmscmd] of gas as against total domestic supply of 90 mmscmd. The maximum retail price [MRP] of urea is...
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Rejuvenating Indian soils – shun flawed policies
According to a 10 year study “The Indian Nitrogen Assessment” carried out by the Indian Nitrogen Group [ING] for Down To Earth [DTE] – a New Delhi-based environment and health magazine – Nitrogen-based fertilizers like urea, which have been instrumental in increasing crop yields in India, are now turning into potent destroyers by polluting land and water, affecting people’s health and leading to climate change. The study says that “agriculture is the main source of nitrogen pollution in India; further cereals like rice and wheat accounting for maximum cropped area pollute the most”. In the past five decades, every Indian farmer has, on an average, used up over 6,000 kg of urea or 120 kg annually. Only 33 per cent...
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Stopping fertilizer subsidy misuse – Aadhaar authentication alone won’t help
In the Union Budget for 2018-19, the finance minister, Arun Jaitely has made a provision of Rs 70,080 crore for fertilizer subsidy which is just about Rs 5000 crore higher than the revised estimate [RE] for 2017-18 at Rs 65,000 crore and almost the same as the budget estimate [BE] of Rs 70,000 crore for that year. The international price of crude oil during the ensuing year is projected to be 15-20% higher. Considering that the international prices of urea as also raw materials/feedstock [natural gas, phosphoric acid, ammonia, sulfur] also increase in tandem and India is heavily dependent on their imports, the requirement for subsidy would be higher. Add to this carry forward of over Rs 30,000 crore from...
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