In its present form, the fertiliser DBT scheme has many loopholes. In the interest of the farmers, the policy needs an overhaul so that they can put subsidy to best use and enhance fertiliser-use efficiency. Will the new Government have the will to do so? The Ministry of Finance and NITI Aayog are working towards preparing a roadmap to directly transfer fertiliser subsidy to the farmers. The data being used to give Rs 6,000 per year to 120 million small and marginal farmers under the Pradhan Mantri Kisan Samman Nidhi will be used for this purpose. The subsidies on fertilisers along with PM Kisan deposits will serve to give a quasi-universal basic income transfer to the farmers. The proposal will be put...
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Category: Fertilizers
Fertilizer subsidy – DBT still a far cry
The ministry of finance and NITI Aayog are working on a road-map for direct benefit transfer [DBT] of fertilizer subsidy to farmers. The data base being used for giving Rs 6000/- per year to 120 million small and marginal farmers under PM Kisan Samman Nidhi – to be extended to cover all farmers [as promised in BJP election manifesto] – will be used for this purpose. DBT on fertilizers plus support under PM-KISAN will be given as quasi–universal basic income transfer. The proposal will be put up for consideration by the new government immediately after it takes charge. To begin with, this will be implemented on trial basis in select districts to cover small and marginal farmers only. However, full...
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Fertilizer reforms – Modi’s report card
The term of the Modi – government will come to an end in a little over two months from now. It is time to take stock of what it has done to the fertilizer sector which was suffering from several policy weaknesses at the time it took charge and there was great deal of expectation that it would kick off major reform. The four major areas which needed focused attention were (i) control on all critical aspects hampering initiatives by manufacturers to reduce cost, improve efficiency and innovate; (ii) imbalance in fertilizer use affecting crop yield, soil health, environment and sustainability of agriculture; (iii) shortfall in supply of gas, feedstock/fuel in production and high price; (iv) increasing subsidy and its...
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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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Fertilizer subsidy – timely payments, a far cry!
The direct benefit transfer [DBT] scheme for fertilizer subsidy was launched at the beginning of Rabi 2017-18 crop season [October 2017 – March 2018] in certain parts of India and progressively extended to cover all the 31 states and union territories [UTs] – starting from April 1, 2018. Its stated objectives were: (i) ensure timely subsidy payments to the manufacturers; (ii) clearing the backlog and (iii) plugging pilferage and leakages in the system. Have these been achieved? To seek an answer to these questions, let us capture a few basics about fertilizer pricing and subsidy. To make fertilizers affordable to farmers, the union government follows a policy of controlling their maximum retail price [MRP] at a low level unrelated to the...
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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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Fertiliser subsidy:policy reforms needed, not tinkering
Considering the crucial role played by fertilisers 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 the cost of production and distribution. To ensure that production is viable at this price, it gives subsidy to the manufacturer to reimburse the difference between the two. In case of urea, the subsidy varies from unit to unit and is administered under the New Pricing Scheme (NPS) whereas for decontrolled complex fertilisers, a ‘uniform’ subsidy fixed on per nutrient basis is given to all manufacturers under the Nutrient Based Scheme (NBS). Since this is subject to submission of...
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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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