The Hindu Business Line : Fertiliser policy

The new fertiliser policy is a step in the right direction and will be widely welcomed. The production of fertilisers, particularly urea, has stagnated at 21 million tonnes and no fresh investments have been made in the last decade.

To compound matters, the fertiliser policy was skewed in favour of urea, resulting in the use of inappropriate fertilisers. Consider this:

The ideal ratio between N, P and K should be 4: 2:1 but in certain States it has been skewed to 20:6:1.

This has led to the inefficient use of fertiliser, resulting in sharp drop in productivity per kilo of fertiliser used.

In 1960, one kg of fertiliser yielded 19 kg of food grains, but this ratio has declined to 12 kg per kg of fertiliser in the last few years, mainly due to excessive use of urea which is highly subsidised. The new fertiliser policy attempts to correct this substantially by indexing fertiliser prices to the main nutrients, N, P and K, and will also help to reduce the prices of complex fertilisers.

The budget provision for fertiliser subsidy has been grossly underestimated and as against Rs 30,000 crore provided in the Budget, the actual subsidy is likely exceed Rs 100,000 crore. The new policy also encourages investment in fertilisers if they can be produced at prices lower than imported fertilisers.

The fertiliser bonds have sucked up the liquidity of fertiliser manufacturers, aggravating the problem. Since the subsidised price barely recover 25 per cent of cost, the government must device a system that would provide timely reimbursement to manufacturers.

M. M. Gurbaxani Bangalore