DBT will save the government quite a lot on the subsidy by eliminating misuse and ensuring better targeting through Aadhaar linkage The manufacturers of non-urea fertilisers are given ‘uniform’ subsidy (on per nutrient basis) under the nutrient based scheme (NBS). —————————————————————————————————– According to a survey by NITI Aayog, nearly two-thirds of the farmers don’t favour direct benefit transfer (DBT) of fertiliser subsidy. If this is also the thinking of our policymakers, then it would leave one shell shocked as it would be tantamount to a complete reversal of the process set in motion a couple of years ago. In FY17, the government launched pilot projects for linking subsidy payments to producers, for the sale of fertilisers to farmers by retailers...
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Category: The Financial Express
Price control: The gas on gas price deregulation
Under a special package for deep/ultra-deep, high-pressure/high-temperature (HP/HT) fields announced in March 2016, the supplies therefrom are allowed ‘premium’ price, linked to the prices of alternate fuels, including fuel oil, naphtha, and imported liquefied natural gas (LNG). The government has initiated discussions to ‘lift price restrictions on domestically produced natural gas’. However, it intends to do it ‘gradually’. It wants to continue with regulated gas pricing for at least three more years. However, in the interregnum, producers will be given freedom to sell a portion of the total output under ‘negotiated pricing deals’ with their customers. Will it help? Under the guidelines in effect since November 1, 2014, for all domestic supplies from fields given under the new exploration and...
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India’s fertiliser policy flawed, policymakers still stuck to the 1970s/80s
These anomalies have cropped up because our policymakers are still stuck to the 1970s/80s thinking, geared towards increasing fertiliser usage The huge arbitrage opportunity thereby created makes the temptation to divert too strong to resist and this can’t be reined in merely by neem coating; no administration, howsoever alert, can monitor a mammoth 600 million bags of urea. The Modi government is in its sixth year, but a coherent policy continues to elude the fertiliser sector. To get a sense of how the central government is approaching the sector, and where the sector is headed, let us look at some crucial pronouncements by the prime minister. First, in the 38th edition of his “Mann ki Baat” radio address to the...
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Why irresponsible registration of pesticide companies must be reined in
The Parliamentary standing committee on agriculture in its 2015-16 report—Impact of chemical fertilisers and pesticides on agriculture and allied sectors in the country—has expressed serious concern over unscientific, excessive use of pesticides. The Parliamentary standing committee on agriculture in its 2015-16 report—Impact of chemical fertilisers and pesticides on agriculture and allied sectors in the country—has expressed serious concern over unscientific, excessive use of pesticides. It laments that associated problems have not been properly addressed by central and state governments. Even as the committee exhorts the Centre for ‘a comprehensive action plan for ensuring environment sustainable manufacturing, import, sale and use of pesticides’, review of the Insecticides Act (IA),1968 and setting up of Pesticides Development and Regulation Authority (PDRA), it has...
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Neem-coated urea: Why is Narendra Modi govt waiting for 5 years to make India self-sufficient in fertilisers?
Addressing the 9th Global Agriculture Leadership Summit on September 8, 2016, chemicals and fertiliser minister, Ananth Kumar proclaimed that neem-coating of all urea supplies meant for use by farmers has resulted in elimination of diversion to chemical industries and smuggling to neighbouring countries. If, the claim is true, it will have a profound impact on the larger picture of demand-supply balance, self-sufficiency in fertilisers, dependence on import, subsidy pay-out, demand for hydrocarbons especially gas and impact on the environment. The total consumption of urea is about 30 million tonnes annually, including 22 million tonnes indigenous and 8 million tonnes of imported product. Since, all of this is sold by manufacturers/importers at a low ‘controlled’ price, excess of cost of production/import...
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Government cap on GM tech royalty hurt the farmer; here’s how
The ministry’s decisions reflect a mindset that views MMBL as an exploitative monopoly. This perception is flawed and out of sync with ground realities Under CSPCO, the ministry fixed the price of cottonseed sales at an ‘uniform’ level and the maximum trait-fee payable to the technology-provider (TP). Given GM Bt cotton accounts for 98% total cottonseeds used in India, the decision was directed primarily at this segment. On July 6, 2016, Mahyco-Monsanto Biotech India (MMBL) withdrew its application for environment clearances for commercial cultivation of cottonseeds carrying its Bollgard II Roundup Ready Flex (B-II-RRF) technology, which uses genes that not only kill pests but also imparts resistance to the herbicide, Roundup. MMBL has attributed its decision to the “uncertainty in...
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GST will boomerang on fertilisers
Even if the lower end of 12% is applied to fertilisers, it would be double the existing duty Given the critical role of fertilisers in ensuring food security, for decades, the government has followed a policy of controlling their prices at low level—unrelated to cost of supply—and reimbursing the excess as a subsidy to the manufacturers. The Goods and Services Tax is being billed as transformative reform that has the potential to drastically reduce transaction costs — owing to elimination of cascading effect of tax-on-tax and withdrawal of a host of local levies— and substantially increase efficiency across the supply chain as interface with multiple authorities over a number of geographical locations gets eliminated. For the fertiliser industry, however, the...
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FDI policy for e-commerce, just a cosmetic change
The problem lies in the government de facto shutting the door for FDI in multibrand offline retail. The department of industrial policy and promotion (DIPP)—the nodal authority for issues relating to foreign direct investment (FDI)—has notified guidelines for FDI in e-commerce. Under these, 100% FDI through the automatic route will be allowed in the ‘marketplace’ format of e-commerce retailing, but not in the ‘inventory-based’ model. Under a marketplace model, an e-commerce entity provides an IT platform on a digital and electronic network to act as a facilitator between buyer and seller. The company may provide support services to sellers in terms of warehousing, logistics, order fulfillment, call centre, payment collection and other services. Post-sales, delivery of goods to the customers...
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DBT for fertilisers is a hoax
Prime Minister Narendra Modi is perceived to be a crusader when it comes to plugging leakages from the subsidy distribution pipeline. Prime Minister Narendra Modi is perceived to be a crusader when it comes to plugging leakages from the subsidy distribution pipeline. He has amply demonstrated this in the case of LPG (liquefied petroleum gas), wherein the government implemented direct benefit transfer (DBT) and saved about R15,000 crore annually. However, when it comes to fertilisers, similar initiatives are conspicuous by their absence. During 2015-16, out of an allocation of R73,000 crore on fertiliser subsidy, as much as R50,300 crore was on urea. The subsidy is administered through manufacturers who are directed to sell urea at a fixed uniform maximum retail...
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India must protect its agricultural support
It needs to get ERPs updated and purchases from poor farmers excluded from product-specific subsidy maths. The World Trade Organization’s (WTO) draft declaration for the ongoing ministerial meeting at Nairobi, Kenya, on December 15-18, 2015, promises to “address all aspects of agriculture reform as a matter of priority”, but does not mention anything about finding a ‘permanent solution’ to India’s concerns on food security. While declaration is just cleverly-worded rhetoric, the fact that India’s concerns remain unresolved is a setback. But, for any one tracking the events since the 9th ministerial meeting, at Bali in December, 2013, this should not come as surprise. It is abundantly clear that, from day-1, developed countries were never serious about finding a permanent solution....
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