Bureaucrats are micro-managing the operations of urea plants through the New Pricing Scheme. This is the surest way to scuttle any initiative to cut costs and improve efficiency The genesis of NPS lies in the Union government asking manufacturers to sell urea to farmers at a low ‘uniform’ price. (Representative Image) In the context of the debate over increasing fertiliser subsidy, a major issue that often escapes public attention is the New Pricing Scheme (NPS) for urea. The genesis of NPS lies in the Union government asking manufacturers to sell urea to farmers at a low ‘uniform’ price unrelated to the cost of production and distribution, which is higher, and its promise to reimburse them the differential amount as a subsidy....
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Category: New Pricing Scheme (NPS) for Urea
P&K fertilizers – subsidy conundrum
A major factor fueling resentment among farmers is the spiraling prices of fertilizers which are critical inputs used in the production of agricultural products. The maximum retail price (MRP) of urea – the predominant source of nitrogen or ‘N’ nutrient supply – is controlled by the Centre at a low level un-related to the cost of production and distribution which is higher (the excess amount is reimbursed to the manufacturers via the subsidy on a ‘unit-specific’ basis under the new pricing scheme or NPS in short). This price has remained unchanged (today’s price is the same as in 2002) even as all cost escalations are absorbed by increasing the subsidy. However, the worry is with regard to another category of...
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Making urea, that is not needed
The Cabinet Committee on Economic Affairs (CCEA) has recently approved subsidy for urea to be produced by Talcher Fertilizers (TFL) – a joint venture of 4 public sector undertakings (PSUs) viz. Coal India Limited (CIL), GAIL (India), Rashtriya Chemicals and Fertilizers (RCF) and Fertilizer Corporation of India (FCI). The TFL is setting up the urea plant with installed capacity of 1.27 million ton per annum at Talcher (Odisha) at an estimated investment of Rs 13,277 crore and is expected to be commissioned by September 2023. The project is based on use of coal gasification technology. According to the union commerce minister, Piyush Goal, the CCEA has given its approval for “a specific subsidy to promote this innovative technology for the...
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Fertiliser DBT an illusion
Despite tall claims made by the UPA and the NDA dispensations since 2012, a gradual transition to direct cash or benefit transfer of subsidy to the farmers has not been done The additional provision of Rs 65,000 crore towards fertiliser subsidy (over and above the Rs 71,000 crore allocated in the Budget for 2020-21), that was announced by the Finance Minister under “Stimulus- III” on November 12, will help in clearing all pending dues to the industry. This has led the latter to believe that this is a precursor to a gradual transition to direct cash or benefit transfer (DBT) of subsidy to the farmers. This is illusory, as despite tall claims made by the UPA and the NDA dispensations...
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Fertilizer DBT – miles away
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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Fertile for Reform: Rational use of urea — Chasing a mirage?
The govt must free up urea pricing and opt for direct transfer of fertiliser subsidies to farmers; no other steps to curb urea misuse will work Second, the need for a comprehensive action plan to increase the MRP of urea was recognized by the Dr GVK Rao committee on Consumer Price of Fertilizers (1987). Over the last five years, the Narendra Modi-led government has made several efforts to tackle diversion, hoarding, black marketing and excessive use of urea—a widely-used fertiliser that accounts for nearly half of India’s total fertiliser consumption. These include (i) mandatorily requiring all manufacturers/ importers to do neem-coating of urea supplies (2015); (ii) making disbursal of subsidy to manufacturers conditional upon actual sales to farmers and sales getting...
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Curbing urea use by half
On December 5, 2017, in his Mann Ki Baat radio address, the Prime Minister said, “Can our farmers take a pledge to reduce urea use by half by 2022? If, they promise to use less urea in agriculture, the fertility of the land will increase and the lives of farmers will start improving.” For this, Modi had in mind a time frame of 5 years Currently, there is excessive use of urea — a dominant source of ‘N’ vis-à-vis complex fertilizers such as diammonium phosphate (DAP) the main source of ‘P’ and muriate of potash (MOP), the main source of ‘K’. This has led to an increasing imbalance in the NPK use ratio. On an all-India basis, currently this ratio...
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Deregulate pricing: How not to curb urea blackmarketing
Instead of ending urea price control and the fertiliser subsidy—replacing it with DBT for farmers—the govt continues to choose zero-impact administrative measures The government must recognise this flaw in the existing policy, decontrol urea and introduce DBT. In a bid to tackle diversion, hoarding and blackmarketing of urea (a widely used fertiliser that constitutes nearly half of India’s total fertiliser consumption), the Union government has decided to restrict its purchase to 100 bags from 999 bags per transaction by one purchaser. In a letter dated August 27, addressed to state chief secretaries, the secretary, ministry of chemicals and fertilisers, Chhabilendra Roul, has sought their opinions on ‘how many such transactions should be allowed per month to each purchaser’. He has...
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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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Curbing excess urea use – remove policy shackles
For decades, farmers in India have been resorting to indiscriminate and excessive use of chemical fertilizers [source of plant nutrients such as nitrogen ‘N’, phosphate ‘P’, potash ‘K’ besides a host of secondary and micro-nutrients; which put simply, are food for crops in as much the same way as cereals, fruits, vegetables are essential for human beings] leading to deterioration in soil health, adverse impact on the environment and imperiling public health. The mother soil is the repository of these nutrients [or ‘food for crops’], the precise quantum in any given location depends on a multitude of factors such as their stock to begin with when farmers started cultivating the land [say 100 years ago or even earlier], addition from...
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