Tags:
Journalism of Courage
Need was never the mother of innovation in the countrys fertiliser sector,courtesy the hitherto monstrous subsidy regime. The result: farmers having to do with whatever was market-viable for the fertiliser industry; the government having to face a mounting subsidy bill. That the Union cabinet has jettisoned that product-based subsidy mechanism and announced a nutrient-based subsidy (NBS) regime especially against objections from UPA constituents,including the party of the minister who holds the chemicals and fertiliser portfolio is welcome. This shift,along with the attendant hike of urea prices,was long due. Indias fertiliser subsidy saw a 530 per cent increase in the last five years,touching Rs 99,456 crore in 2008-09. The NBS regime will cut subsidies down by almost Rs 44,000 crore. Whats more,fertiliser companies will be incentivised to broaden their product range beyond the 15 products currently subsidised and therefore marketed. This will provide farmers with more options,based on specific soil needs. This is expected to ensure not only a more balanced fertiliser use but also a rise in agricultural productivity as the use of secondary and micro nutrients increases.
The NBS regime for phosphatic and potassic fertilisers will allow producers the flexibility to determine retail prices of fertilisers while the government subsidises nutrients. The fertiliser industry will be able to vary the nutrient mix and use that for final price determination,giving farmers more choice,better fertiliser balance and higher yields. In the long term,soil health,of particular concern in the countrys food bowl of the Indo-Gangetic plains,should improve. Besides,the NBS will likely portray more accurate fertiliser demand and make international pricing more realistic. This decontrol is also
expected to attract new investment to the sector. The old regime also locked the farmer in with urea,despite the availability of better and safer options,since its price was fixed at Rs 4,830 per tonne. The subsidy on urea itself amounted to a fifth of total fertiliser subsidies,and the 10 per cent hike on urea prices to Rs 5,310 per tonne too was overdue. The government,of course,retains the retail urea price in its hands.
The NBS fulfils a 2009 budget promise,coming at a time when increased expenditure on agriculture and food has resulted in a shortfall in farm output and steep inflation. This is partly due to misdirected spending the chemicals and fertiliser ministry increased its expenditure four-fold in the last six years,with more than 80 per cent of its total outlay going to fertiliser subsidies,even as irrigation and water resources languished in neglect. The cabinets decision demonstrates the need to not let political questions hold reform to ransom.
