During April–November, 2014, urea imports were 900,000 tons (16 percent) less when compared to corresponding period in 2013. The shortfall was aggravated by drop in supplies from OMIFCO (Oman-India Fertilizer Company) – a joint venture between IFFCO, KRIBHCO and Oman Oil Company (OOC) – with whom India has a long-term off-take agreement. This together with shortfall in domestic production (3 naphtha-based plants viz., Madras Fertilizers; Mangalore Chemicals & Fertilizers and Southern Petrochemicals Industries had stopped producing due to government’s decision to suspend subsidy payments) led to aggravation of imbalance in the demand–supply in the run up to Rabi season (October, 14 to March, 15). The result was proliferation of black-marketing especially in northern and eastern parts with urea selling at over...
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Category: Fertilizers
Fertiliser self-sufficiency is a pipe dream
For nearly four decades successive governments have vowed to achieve self-sufficiency in the production of fertilisers, yet this goal has eluded them so far, barring for a brief while in the early 1990s. Will things be different under Modi? Immediately after the current government took charge, fertiliser minister Ananth Kumar reiterated the need to reinvigorate the sick plants of the Fertiliser Corporation of India (FCIL) and Brahmaputra Valley Fertiliser Corporation of India (BVFCL)—earlier known as HFCL—both central PSUs. Both have been incurring losses for decades. Indeed, some plants—Ramagundum and Talcher (FCIL) and Haldia (BVFCL)—were babies born sick. These PSUs have been on the ventilator for ages with the Centre pumping in thousands of crores of rupees to keep them alive....
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Self-sufficiency in fertilizers – a pipedream
For nearly 4 decades, successive governments have vowed to achieve self-sufficiency in production of fertilizers yet, this much trumpeted goal has eluded them barring a brief stint in early 90s. Will things be different under Modi – dispensation? Immediately after the present government took charge in May, 2014, fertilizer minister, Ananth Kumar reiterated the dire need for achieving self-sufficiency in fertilizers by re-invigorating sick plants of Fertilizer Corporation of India (FCIL) and Brahmaputra Valley Fertilizer Corporation of India (BVFCL) (earlier known as HFCL) both undertakings of central government. Both these undertakings have been incurring losses for several years in fact decades. Indeed, some plants under them viz., Ramagundum and Talcher (FCIL) and Haldia (BVFCL) were babies born sick. It would...
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What is holding back direct fertiliser subsidy transfer?
SUMMARY Direct transfer of subsidy to farmers holds the key to countering all ills afflicting the fertiliser sector Direct transfer of subsidy to farmers holds the key to countering all ills afflicting the fertiliser sector in India. Successive governments have talked about it and yet none has ventured to implement this. What has held them back? The idea was first mooted nearly four decades ago when, in March 1976, faced with increasing prices of complex phosphate fertilisers—then, there were no controls and manufacturers were free to fix price—the government introduced a flat subsidy at the rate of R1,250 per tonne phosphate nutrient (P2O5). The initial plan was to give the money directly to farmers so that the effective price (net...
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Direct fertilizer subsidy payment to farmers – why dither?
Direct transfer of subsidy to farmers hold the key to countenancing all ills afflicting the fertilizer sector in India. Successive governments have talked about it and yet, none has ventured to implement this concept. What has held them back? The idea was first mooted nearly 4 decades ago when in March 1976, faced with increasing prices of complex phosphate fertilizers (then, there were no controls and manufacturers were free to fix price), the government introduced flat subsidy @ Rs 1250 per ton phosphate nutrient (P2O5). The initial plan was to give the money directly to farmers so that the effective price (net of subsidy) paid by them for these fertilizers was correspondingly reduced say by Rs 575 per ton in...
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We need a coherent urea investment policy
A burden: And nobody will gain from it – A MURALITHARAN The urea industry is in need of wholesome nourishment rather than the piecemeal changes the Centre has been offering October 26, 2014: In January 2013, the Government had notified a urea investment policy (UIP) for new greenfield projects; expansion of existing units; additional urea from revamp of existing units and revival of projects of sick public sector units of the Fertilizer Corporation of India (FCIL) and Hindustan Fertilizer Corporation (HFCL). Early this year, it made two amendments in the UIP. The first dispensed with the “dispensation of guaranteed buy-back”, while the second requires interested private companies to give a bank guarantee of ₹300 crore for every project, while PSUs...
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Urea investment policy – a dream shattered
In January 2013, government had notified a urea investment policy (UIP) for new green field projects; expansion of existing units; additional urea from revamp of existing units and revival projects of sick public sector units of Fertilizer Corporation of India (FCIL) & Hindustan Fertilizer Corporation (HFCL). Early this year, it made two amendments in UIP. The first amendment dispensed with the “dispensation of guaranteed buy-back ” outlined earlier. A second amendment requires interested private companies to give a bank guarantee (BG) of Rs 300 crore for every project, while PSUs firms are exempted from it. (In view of general elections and model code of conduct coming in to force, its notification was kept in abeyance. The amended policy has now...
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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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Time to say ‘good bye’ to subsidies
One of the planks on which Modi got mandate to govern was his promise to deliver on fiscal consolidation. In its maiden budget for 2014-15, government has pledged to achieve this by pruning subsidies and higher tax revenue based on lower rates. Recently, prime minister approved constitution of an expenditure management commission (EMC) under chairmanship of Dr Bimal Jalan former governor RBI to recommend a road-map up for rationalizing and phasing out major subsidies viz., food, fertilizers and oil. The commission has been asked to submit its report within 18 months. However, it will submit an interim report in 6 months. The protracted time frame for the committee should not be taken to mean any dilution of government’s commitment on this crucial reform....
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Food, fertilizers and fuel – need ‘overhaul’, not just re-routing of subsidy
In its maiden budget presented on July 10, 2014, NDA-government has announced setting up of an expenditure reforms commission (ERC) that will examine all subsidies viz., food, fuel, fertilizers and come up with a road map for restructuring them. Further castigating existing dispensation as one that does not target beneficiaries (read poor) and leads to ever rising ‘un-quantifiable’ subsidies, it has promised to switch over to a scheme of direct cash transfer (DCT) to poor in a focused and transparent manner. Since then, it is close to a month and ERC has not been constituted as yet. At this pace, we can’t expect its recommendations before end of current year. Therefore, any major restructuring may have to wait at least...
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