This is the only way to eliminate diversion, prevent excess use, promote competition, and lower cost The Centre is planning to conduct pilots in a few districts of the country on a modified version of direct benefit transfer (DBT) in fertilisers that would establish some connection between land holding and the nutrient’s consumption. The intent is to monitor consumption, prevent excess usage and chances of misuse. DBT, as the wording implies, has to do with transfer of fertiliser subsidy. Fertiliser subsidy arises because the Centre directs manufacturers/importers to sell fertilisers to farmers at a low maximum retail price (MRP), unrelated to the cost of supply, which is much higher. In the case of urea, the difference is reimbursed to the...
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Category: Fertilizers
Nano urea and some tall claims
Can nano urea help in achieving the stated objective? Can it help to make a dent in the subsidy? The government spends huge sums on fertiliser subsidy — the likely expenditure during the current financial year being about Rs 2,50,000 crore. Credit: AFP Photo Launching an ambitious programme for the promotion of liquid nano fertilisers at the two-day ‘Kisan Samman Sammelan’ at the Indian Agricultural Research Institute (IARI) on October 17, Prime Minister Narendra Modi exuded confidence that it would help attain self-sufficiency in the crucial sector and help farmers enhance their income while substantially reducing the impact on the environment. Already, the Indian Farmers Fertiliser Cooperative Limited (IFFCO) — a major fertiliser manufacturer — is producing indigenously-developed nano urea at its Nano Biotechnology Research...
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Nano fertiliser move can be a game changer
Nano fertilisers not just promise to cut down subsidy burden but also improve the income of farmers Inaugurating function of the two-day “Kisan Samman Sammelan” at the Indian Agricultural Research Institute (IARI) on October 17, Prime Minister Narendra Modi announced two major policy initiatives — “One Nation, One Fertiliser” scheme under which all fertiliser manufacturing and market companies will sell all subsidized fertilisers under a single brand Bharat; and promote use of liquid nano fertilisers. While the government intends to use “One Nation, One Fertiliser” scheme to reduce the criss-cross movement of fertilizers that will eventually help reduce freight subsidy bills and make quality fertilizer available at lower cost, adoption of liquid nano urea is meant to help attain self-sufficiency...
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Free fertiliser industry by removing controls
A prospective buyer will have to think a hundred times before deciding to buy a fertiliser Public Sector Undertaking as these are prone to inefficiencies In a big-bang approach to privatisation of Central Public Sector Undertakings (CPSUs) announced in the Budget for 2021-22, Finance Minister Nirmala Sitharaman had divided them in two broad categories — strategic and non-strategic. The strategic includes four subgroups: atomic energy, space and defense; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services, non- non-strategic includes all other sectors such as industrial and consumer goods, hotel and tourist services, trading, and marketing, etc. As per the plan, the government would privatise all CPSUs in the non-strategic sector (all loss-making enterprises...
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Saving fertiliser subsidy with DBT
The Government should stop routing subsidies through manufacturers and give these as direct benefit transfer Splurge in fertiliser subsidy in the last three years is giving jitters to policy makers, especially the Union finance ministry, which has to foot the bills. Fertiliser subsidy amounts to payments made to manufacturers or importers to cover the excess of the cost of production/import and distribution over a low maximum retail price (MRP, the price asked by the Union Government to charge from the farmers). These payments are under two broad categories viz. (i) urea, main source of nitrogen or ‘N’ supply; (ii) phosphate or ‘P’ and potash or ‘K’ fertilizers – commonly known as non-urea fertilizers – popular fertilizer in this category being...
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Reining in fertilizer subsidy in India
From an already high of Rs 83,000 crore during 2019-20, the subsidy could cross Rs 200,000 crore during 2022-23. Fertilizer subsidy or payments made to manufacturers or importers to cover the excess of the cost of production/import and distribution over a low maximum retail price (MRP) – they are asked by the Union Government to charge from the farmers -has increased by leaps and bounds during the last three years. From an already high of Rs 83,000 crore during 2019-20, it increased to Rs 138,000 crore during 2020-21, Rs 162,000 crore during 2021-22 and could cross Rs 200,000 crore mark during 2022-23. Is there a way this escalating trend could be reined in? Subsidy payments are made under two broad...
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Reining in fertilizer subsidy
Fertilizer subsidy or payments made to manufacturers/importers to cover the excess of the cost of production/import and distribution over a low maximum retail price (MRP) – they are asked by the Union Government to charge from the farmers – has increased by leaps and bounds during the last three years. From an already high of Rs 83,000 crore during 2019-20, it increased to Rs 138,000 crore during 2020-21, Rs 162,000 crore during 2021-22 and could cross Rs 200,000 crore mark during 2022-23. Is there a way, this escalating trend could be reined in? Subsidy payments are made under two broad categories of fertilizers viz. (i) urea; (ii) phosphate or ‘P’ and potash or ‘K’ fertilizers – also branded as non-urea...
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Fertiliser fears come to fore due to war
The crisis in Ukraine following the invasion by Russia has exposed the chinks in the Indian fertiliser industry. Despite predictions by successive governments during the last four decades that India would become self-reliant on the fertiliser front and putting in place policies aimed at achieving the goal, the country remains preponderantly dependent on imports for meeting the requirements of its farmers. The three most popular fertilisers used by farmers are urea, di-ammonium phosphate (DAP) and muriate of potash (MOP), which are the major sources of nitrogen, phosphate and potash respectively. Natural gas is the raw material/feedstock/fuel used for the manufacture of urea whereas phosphoric acid and ammonia are the prime raw materials (RMs) needed for making DAP. In the case...
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Fertiliser subsidy: Political will missing
In the Union Budget for 2022-23, the Modi government has allocated Rs 1,05,000 crore for fertiliser subsidy, which is Rs 35,000 crore less than the revised estimate (RE) for 2021-22 at Rs 1,40,000 crore. Fertiliser subsidy arises because the Centre wants manufacturers/imports to sell fertilisers to farmers at a low maximum retail price (MRP), unrelated to the cost of supply, which is much higher. In the case of urea, the difference is reimbursed to the manufacturers as a subsidy on a ‘unit-specific’ basis. In the case of phosphatic and potassic (P&K) fertilisers, it fixes ‘uniform’ subsidy on a per-nutrient basis for all manufacturers and importers. The three basic factors impacting subsidy are MRP, per unit cost of supply and the...
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The war’s impact on our fertiliser industry
Had there been a free market scenario, the industry would have come under serious strain. But that is not to be as fertilisers are under control The crisis in Ukraine following invasion by Russia has sent shock waves through out the world economy. In India, even as the steep rise in energy import bill will affect almost all sectors of the economy, the impact on fertilizers will be more pronounced. At the outset, let us capture a few relevant facts. Despite prognostications by successive governments during the last four decades or so that India would become self-reliant in fertilizer availability and putting in place policies aimed at achieving the goal, even today, the country remains preponderantly dependent on imports for...
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