The Hindu Business Line : Phosphoric acid group favours new formula for input subsidy

CITING several constraints for survival in the volatile market conditions, the Indian phosphatic fertiliser industry players, under the leadership of the Phosphoric Acid Consumer Group (PACG) has asked the Government to subsidise inputs at the beginning of the year itself and to leave the decision on output costs to the market forces.

The PACG spokesperson and Murugappa Group Director, Mr A. Vellayan, told reporters that the PACG had recently submitted a memorandum to the Ministry of Fertilisers on the issue. The PACG consists of 12 leading DAP manufacturers in the country, both from private and public sectors.

The PACG has suggested the Government to take into account the actual costs of raw materials finalised by the Indian fertilisers industry in line with the prevailing international prices. According to Mr Vellayan, in the absence of such a mechanism, the domestic fertilisers industry would have to abandon production resulting in serious shortage of fertilisers in the current season.

"At present, the phosphatic fertiliser industry is facing a peculiar constraint, wherein the Government determines the price at which fertilisers are to be sold to the farmers. As the manufacturing cost of fertilisers far exceeds their selling price, the Government compensates the manufacturer through a `subsidy', which is believed to be handsome enough to make fertiliser manufacture highly profitable. Nothing could be farther from the truth," Mr Vellayan said.

According to him, the Government uses fertiliser manufacturer as a mere conduit to pass on the subsidy to the farmer. Fertiliser subsidy is believed to be one of the major contributors to the Government's fiscal deficit, and that the fertiliser industry is being subsidised for its implicit inefficiencies.

"Another fallacious belief is that imported fertilisers are cheaper than domestic production. But it is not often seen that fertiliser subsidy is a part of the overall agricultural subsidy incurred essentially for providing food security to the country's poor," Mr Vellayan said.

Stating that India is the third largest consumer of fertilisers in the world after China and United States, he said the average consumption of fertilisers in India was abysmally low. To improve their consumption, fertilisers must be made more affordable to the farmer, while at the same time ensuring a fair price for the produce. Only then will the country, the industry and the farmer benefit in the long run, he said.

According to Mr Vellayan, the Indian fertiliser industry is heavily dependent on phosphoric acid and potash imports and is continuing production of phosphatic fertiliser in good faith despite lack of clarity in the subsidy front. "Prices of all these fertiliser raw materials are governed by demand and supply situation in the global market and we can do very little about it except negotiate best possible competitive prices in line with the prevailing international prices," he said.

More Stories on : Fertilisers | Agricultural Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page