A National Committee (NC) under the Prime Minister has been constituted on ‘direct cash transfer’ of subsidy. Will this prove to be more potent than the present dispensation? What is wrong with the latter? The present system does not differentiate between rich and poor; breeds inefficiencies and distortions, undermines competition and gives an easy platform to all and sundry — producers, suppliers, traders — to make unjust gains. SUBSIDY REGIME Urea MRP is controlled at a low level unrelated to cost of supply, which is much higher. A differential amount is reimbursed to the producer as subsidy. It varies depending on source of supply, whether it is import or indigenous. Decontrolled P&K fertilisers, too, are subsidised. Unlike urea, all producers/suppliers...
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Category: The Hindu – Business Line
Fertilisers policies pull in opposite directions
The Union Budget for 2012-13 generated huge expectation about the Union Government’s keenness to reduce ballooning subsidies that have been a major source of its fiscal targets going awry. The then Finance Minister promised to contain the total subsidy bill within 2 per cent of the GDP in the current fiscal and at 1.75 per cent in the next three fiscals. However, there is little to show for any credible action plan in this regard. The recent measures to restrain subsidies in diesel and LPG are too little and too late. As far as fertilisers go, the powers-that-be have not even demonstrated a basic intention to walk the talk. The Cabinet Committee on Economic Affairs has recently approved a meagre...
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