The Hindu Business Line : Key is in the political will: Vellayan

Chennai, July 6 Mr A. Vellayan, Chairman of E.I.D. Parry, has said the key to moving towards a nutrient-based subsidy regime from the present product-based subsidy for fertlisers is in the political will and the commitment needed to successfully implement these proposals at the ground level.

Freeing of prices

Moving towards a nutrient-based subsidy regime – and away from the current system that focuses only on nitrogen, phosphate and potassium – would involve a hike in retail prices of fertilisers and eventually doing away with the controls on retail pricing. This would provide for the additional costs fertiliser companies would incur in incorporating micronutrients such as sulphur, boron zinc into the chemical nutrients.

Only when controls on fertiliser prices are removed can the introduction of innovative products and investment happen in the sector along the lines envisaged by the Finance Minister. Last year, with the input costs being high, subsidies accounted for 80 per cent and the maximum retail price (MRP) 20 per cent of the fertiliser cost. This year, with the input costs down, it is estimated to be 60 per cent subsidy and 40 per cent MRP, he said.

A huge task

Similarly, on direct transfer of subsidy to the farmers instead of routing them through the fertiliser companies, Mr Vellayan, who is also the Vice-Chairman of the Murugappa Group, said the industry would welcome it to the extent that it relieves them of a major responsibility.

The Finance Minister’s statement is a “laudable public exercise”, Mr Vellayan said. But the feasibility of administering such a large exercise remains to be seen. The farmer is not always the land owner and also the sheer numbers involved would make it a huge task, he said.

Mr Vellayan also welcomed the proposals in increasing flow of agriculture credit to Rs 3.25 lakh crore from Rs 2.87 lakh crore, and the proposal to strengthen irrigation infrastructure.