Consistence needed

The fertiliser policy, introduced in 1977 based on Marathe Committee Report, aimed at supplying fertiliser to resource poor farmers at a pri...

The fertiliser policy, introduced in 1977 based on Marathe Committee Report, aimed at supplying fertiliser to resource poor farmers at a price they could afford so as to increase the consumption of fertilisers to increase food production and ensure fair return to fertiliser producers and induce industry8217;s health and growth. Nutrient production increased from 3 million tonnes mmt in 1980-81 to 11.2 mmt in 1996-97, consumption from 5.5 mmt to 14.3 mmt and foodgrains production going up from 129 million tonnes to 198 million tonnes.

The fertiliser subsidy is the difference between the selling price and reasonable cost of production and distribution based on certain norms, all fixed by the Government for each individual unit. The fertiliser selling prices were not increased during eighties, despite the cost of production going up due to increase in the cost of administratively controlled feedstock and input/services and general inflation increasing fertiliser subsidy.

Since then, the industry has been avictim of adhocism as all efforts have been directed to reduce subsidy without tackling the basic causes. After belated increase of 30 per cent in 1991, while urea price was reduced by 10 per cent, phosphatic and potassic products were decontrolled following JPC8217;s Report in August 1992. However, the cost of production kept on increasing due to increase in the cost of imported raw materials and intermediates and depreciation of rupees vis-a-vis US D. This led to reduction in Pamp;K consumption.

Government should announce, without any further delay, the concession rate taking into account viability of supplies both from domestic and import sources. Instead of uncertainty on yearly or seasonal basis, this policy should remain valid until amended or withdrawn with due notice to the industry. This should include rationalisation of concession rate of complex fertilisers where nitrogen content is ignored and SSP which is denied proportionate support.

Also the Ministry of Agriculture is not equipped to undertakeeither costing or payment function and is not responsive to the needs of the industry. As long as subsidy scheme is implemented through the industry, it is logical and essential that this should be entrusted to the Ministry of Fertilisers as was the position prior to decontrol.

The High Powered Committee submitted its Report on 3rd April, 1998. Regrettably, this Committee did not include any representative of farmers or the industry and its recommendations are neither farmer nor industry friendly. The report has many fallacies and contradictions.

The Committee has not addressed the adequacy or otherwise of incentives to the industry and issues relating to reasonableness of return on networth and depreciation, and input pricing and its impact on RPS which are part of terms of reference. An objective and dispassionate analysis of these issues would have helped in clearing some of the lingering misconceptions on the subject and formulating a just and effective fertiliser policy.

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It is, therefore,necessary that the Government should, in consultation with the farmers and fertiliser industry formulate a rational fertiliser pricing policy so that the health and growth of fertiliser industry, so vital for our food security, is not jeopardised.

The author is the Director General of the Fertiliser Association of India.