DAP is a widely used complex fertiliser that supplies 46% phosphate or P nutrients besides 18% Nitrogen (N). The annual consumption of DAP is around 10 to 11 million tonnes. During the Rabi crops season (October 2024 – March 2025), many parts of the country are reporting a shortage of di-ammonium phosphate (DAP). DAP is a widely used complex fertiliser that supplies 46 per cent phosphate or P nutrients besides 18% Nitrogen (N). The annual consumption of DAP is around 10 to 11 million tonnes. Against this, domestic production is less than half 4.5 – 4.8 million tonnes. The deficit is made up of imports from countries such as Russia, Morocco, Saudi Arabia, Jordan, Egypt, and China. According to the...
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Category: Deccan Herald
Overstating food inflation
The CPI uptick is traced to food inflation which has a 40% weightage in the index On October 9, the Reserve Bank of India (RBI) Governor Shaktikanta Das announced the decisions taken by the six-member Monetary Policy Committee (MPC) in its fourth bi-monthly meeting of the current financial year (FY). It kept the policy rate (the interest rate at which the RBI lends to banks) unchanged at 6.5%. However, it altered its policy stance from “withdrawal of accommodation” to a neutral stance. The RBI fixes the policy rate in such a manner as to maintain the Consumer Price Index or CPI (it corresponds to a basket including food, fuel, manufactured goods and select services) within the target range of 4% (+/-...
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Compensation cess should go
In its meeting held early this month, the Goods and Services Tax Council decided to set up a Group of Ministers (GoM) to suggest “how to go about” the GST compensation cess, which is levied on luxury, sin and demerit goods after the loans taken to meet the revenue shortfall of states during Covid-affected years are repaid. Reports that the Group of Ministers will be “reworking its nomenclature” suggest policymakers intend to continue the levy even after the March 31, 2026 deadline, when it is supposed to be withdrawn as per the subsisting arrangement. Why should the levy be continued? Following the Constitution Amendment Act, 2016, which introduced the GST, the Union Government also introduced the GST Compensation Act, 2017. It...
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Privatisation off the table for banks
With stalled reforms and limitations of coalition politics, PSBs remain shackled by govt control In her Budget speech for the financial year 2021-2022, Union Finance Minister Nirmala Sitharaman announced the Modi government’s policy on disinvestment of central public sector undertakings (CPSUs). She mentioned plans to privatise two public sector banks (PSBs) and one insurance company. A PSB is a bank where the central government holds a majority share of over 50%. Disinvestment refers to the sale of these shares to private investors. When such a sale reduces the government’s shareholding in a PSB below 50% and ownership and management control are transferred to a private entity, it is termed privatisation. Has there been any follow-up action to the finance minister’s...
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Gas pricing: New formula, old controls
India consumes 59.5 billion cubic metres (bcm) of NG annually. Nearly 54% of this is produced domestically, and the balance is imported. The decision of the Union Government to grant a 20 per cent premium over the price determined by the Administered Price Mechanism for any natural gas that state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) will produce from the ‘new wells’ or ‘well interventions’ from their nominated fields has made the NG pricing murkier. India consumes 59.5 billion cubic metres (bcm) of NG annually. Nearly 54 per cent of this is produced domestically, and the balance is imported. Of the domestic gas, around two-thirds is from the so-called ‘legacy fields’; those include fields given...
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Centre’s fiscal outlook isn’t rosy
In the Union Budget 2024, the government has set a fiscal deficit target of 4.9 per cent of the gross domestic product, which is 0.2 per cent less than the 5.1 per cent target fixed in the Interim Budget. In fixing that target, the finance minister had assumed a dividend receipt of Rs 80,000 crore from the Reserve Bank of India from the latter’s operations during the financial year 2023-2024 to be available for use by the Centre during the FY 2024-2025. In May, the RBI approved a mammoth dividend transfer of Rs 210,000 crore to the Centre, which is Rs 130,000 crore higher than the provision of Rs 80,000 crore in the Interim Budget. Taking nominal GDP of around...
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Sans political will, power theft persists
According to then Union Power Minister R K Singh, AT&C losses were previously as high as 27%. For example, if 100 units of electricity leave power dispatch centres and 27 units are stolen and not paid for. The Centre is planning to launch a new scheme to help power distribution utilities (discoms) cut technical losses through “transition-financing” of necessary capital expenditures. Discoms, mostly owned and controlled by state governments, are at the core of the power supply and distribution network in the country. They buy electricity from generating companies (gencos) and supply it to consumers. Technical losses, specifically aggregate technical and commercial (AT&C) losses, often mean power theft. According to then Union Power Minister R K Singh, AT&C losses were...
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Reining in food inflation
During the fiscal year 2023–24, the Union government launched a scheme to sell food at subsidised rates under the Bharat brand. Bharat Chana was introduced in July 2023, Bharat Atta in November 2023, and Bharat Rice in February 2024. Under this scheme, the Food Corporation of India (FCI) buys cereals from farmers and sells them to the National Agricultural Cooperative Marketing Federation of India (Nafed) and the National Co-operative Consumers’ Federation of India (NCCF). The Nafed and NCCF then directly sell Bharat brand products to the general public through retail stores, mobile vans, and e-commerce platforms such as Amazon and BigBasket. These products are priced lower than the market price. For example, Bharat Atta is sold at Rs 27.5 per...
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A clause that doesn’t buy peace
The 13th Ministerial Conference of the World Trade Organisation held in Abu Dhabi in February 2024 ended in a deadlock. However, the Union Minister for Commerce and Industry, Piyush Goyal, who led the Indian delegation, was “completely satisfied.” On the contentious issue of finding a permanent solution to India’s public stock-holding (PSH) programme for food security, he was alluding to the so-called ‘peace clause’ sanctioned at the 9th MC held in Bali (2013), and that arrangement stays. Does it help? Under the PSH programme, government agencies, such as the Food Corporation of India (FCI), buy agricultural produce such as wheat, rice/paddy, and coarse cereals from farmers at the minimum support price (MSP) and give it free to India’s poor under...
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Detach PSU share sale from budget
If the government’s intent was not to view it as an exercise in balancing the budget, as stated by the finance secretary, then it made no sense to fix a target. Yet, setting a target for boosting non-tax revenue receipts means that it hasn’t shed its age-old stance of linking this exercise with the budget. At a briefing following the presentation of the interim budget for the financial year 2024-25 by Finance Minister Nirmala Sitharaman on February 1, Finance Secretary TV Somanathan stated that the “government no longer views disinvestment — fancy nomenclature for sale of Union government shareholding in central public sector undertakings (CPSUs) — from the perspective of balancing the budget”. The statement is out of sync with...
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