Under the “Stimulus – III” unveiled on November 12, 2020, the union finance minister, Nirmala Sitharaman made an unprecedented announcement of releasing an additional Rs 65,000 crore towards fertilizers subsidy over and above Rs 71,000 crore allocated in the budget for 2020-21. For an industry used to not getting thousands of crores in subsidy dues year-after-year for several decades in the past, this has come as a big bonanza in as much as the amount will help in clearing almost all of their pending dues. But, the Fertilizer Association of India (FAI) – an umbrella organization of fertilizer manufacturers – is reading a lot more into this decision. It is seeing this as a precursor to structural reforms in this...
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Category: Concession Scheme for P & K
Hoping for a coronavirus-induced fertilizer reforms
Even as Prime Minister Narendra Modi has declared his intent to use Covid–19 as an opportunity to implement big bang reforms, the government is silent on fertilizers – a sector that has been crying for reforms for far too long. To put things in perspective, let us take a look at some basic facts on existing policies. Prior to the 1990s, both urea –main source of nitrogen (N)–and phosphate (P) and potash (K) fertilizers such as di-ammonium phosphate (DAP) and a whole range of complex fertilizers containing N, P&K in different proportion etc, fell under pricing and distribution controls. The maximum retail price (MRP) of each fertilizer was controlled at a low level and excess of cost of production and...
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Fertilizer reforms – Corona connection
Amidst all the bad news on the economic front under a prolonged lockdown, the meteorological department has come out with some good news for fertilizers – the most crucial agricultural input that help in increasing crop yield. The department has predicted normal monsoon with the country as a whole receiving 100 per cent of the long period average (LPA) of 88 centimetre rainfall. This together with substantial increase in cash in the hands of farmers [record procurement of wheat by government agencies viz. Food Corporation of India et al at the minimum support price (MSP) alone has given them about Rs 40,000 crore; direct income support of Rs 2000/- each to about 9 crore farmers under PM KISAN yielding Rs 18,000 crore...
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Why half-baked fertilizer reforms won’t deliver
If the government wants to restrict subsidised supply only to small and marginal farmers having landholding size <2 hectares, this will require two streams of supplies in the distribution channels viz. The Union government controls the maximum retail price (MRP) of urea at a low level, unrelated to the cost of production and distribution, which is much higher. —————————————————————————————————— Reportedly, the government is likely to fix nutrient-based subsidy (NBS) rate for urea before rolling out the direct cash transfer (DCT) of urea subsidy to farmers’ accounts. The subsidy, expressed as rupees per hectare, will be based on soil health, and size of landholding. The idea of NBS for urea is not new. It was recommended, in 2012, by a...
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A subsidy policy hamstrung by a desire to contain it
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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‘Make in India’ skips fertilizers
Even as Modi – government has unleashed a wave of reforms to accelerate the pace of foreign direct investment [FDI] and give a boost to prime minister’s flagship “Make in India”, fertilizers happens to be one sector that has been completely bypassed. While, indigenous production in all segments of this crucial industry continues to languish, the most neglected is DAP [di-ammonium phosphate; it contains 18% nitrogen [N] and 46% phosphate [P]] where traders have hey-day at the expense of domestic industry. Of the total DAP consumption in India, nearly 60% is met from imports. India is the single biggest buyer of DAP in global market with a share of more than 50 per cent of globally-traded DAP. Even for domestically-manufactured...
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HIGH COST OF POPULIST UREA POLICY
By keeping urea fertiliser prices artificially low, while non-urea fertilisers have been de-controlled, the Modi regime is encouraging an unhealthy dependence on this product, ignoring its smuggling and pilferage, and allowing the subsidy bill to increase The Union Government’s decision to freeze the maximum retail price of urea for four years is bewildering. The decision was taken on May 13 at a Union Cabinet meeting chaired by Prime Minister Narendra Modi. During the past one-and-a-half decade or so, the MRP of urea, which has been under statutory control for close to six decades now, was not touched at all — except once in 2010, when it was increased by a meagre 10 per cent. This was despite the fact that...
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Stop skirting fertiliser reform
Soil remedies Fertiliser reforms are good for farmers P RAJU By taking tough decisions now on MRP and subsidies, the Government will ensure better times to follow September 10, 2014: The Prime Minister unveiled a five-point agenda for ushering in a technology-led second green revolution in India. One of these is the issuing of a soil health card (SHC) to every farmer, with recommendations for fertiliser use. But will this help address the persisting imbalance in fertiliser use? Though the Economic Survey recognised the seriousness of the problem, the Budget was silent on any policy steps to address it. To get maximum crop yield from fertiliser use and maintain soil health, a farmer needs to apply all three major nutrients,...
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Fertilizer reforms – deliver bitter pill for ‘achchhe din’
While, replying to debate on President’s address, the prime minister unveiled a 5 points agenda for ushering in a technology-led second green revolution in India. One of these is issue of soil health card (SHC) to every farmer to apprise about status of his soil. SHC will mention inter alia recommendations for fertilizer use taking in to account nutrient status of soil and crop type. The information will be computerized and each farmer given a unique identification number (UIN) to download the card for his farm. If the mission can be achieved within 5 years term of this government and farmers start following recommendations as per their respective cards, it will revolutionize the way Indian agriculture is practised. However, mere...
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Fertilizer Industry in India – Challenges and Way-forward
Fertilizers – key to food security and sustainable agriculture Food security is of paramount importance to meet the growing food needs of an ever increasing population. Not having sufficient domestic production of food to meet requirement of 1.25 billion plus and still expanding will not only put a huge burden on scarce foreign exchange resources but can also expose us to exploitation in global market. Hence, there can be no compromise on this overriding goal. Agriculture has a share of around 15% in gross domestic product (GDP) and nearly 60% of population derives its livelihood from it. Industry and services sectors too depend heavily on it for their rapid and sustained growth. Therefore, agriculture needs to grow rapidly not only...
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