Nutrient-based fertiliser subsidy policy is flawed; needs review

Our Bureau New Delhi July 9 | Updated on July 09, 2014

Subsidy worries A file photo of a farmer spraying fertiliser in his farm inKerala. The Survey has called for direct cash transfer of fertiliser subsidy.

Pricing of subsidised fertilisers leading to skewed usage

Concerned over the increased use of cheaper urea, the Economic Survey has called for a review of the nutrient-based subsidy (NBS) policy and made a pitch for transfer of subsidy directly to farmers.

“The roll-out of NBS was flawed since urea was kept out of ambit, which has defeated the objective use of nutrients,” the Survey said “There is a need to review the NBS policy,” it pointed out.

The consumption of urea – the main source of Nitrogen (N) – has increased from 59 per cent to 66 per cent of total fertilisers consumed in 2012-13 over 2010-11.

However, the per hectare consumption of fertiliser has declined from 140 kg to 128 kg over the same period.

Prices of urea are highly subsidised by the Government, while the non-urea complexes were decontrolled with the introduction of NBS in March 2010.

The fertiliser subsidy stood at ₹67,971 crore in 2013-14 , an increase of 11 per cent over 2009-10. India meets 80 per cent of its urea requirement through domestic production, but it is largely import dependent for its potassic (K) and phosphatic (P) fertiliser requirements.

“The current trends in agricultural output reveal that the marginal productivity of soil in relation to the application of fertilisers is declining,” the Survey pointed out.

The pricing of subsidised fertilisers is also probably responsible for higher usage of straight fertilisers and the skewed usage of nutrients.

While NPK ratios were higher than the recommended national 4:2:1 NPK balance in 2009-10, the situation has drastically worsened, it said.

Imbalanced use

“The indiscriminate use of NPK has led to imbalanced use of soil nutrients, especially in Haryana and Punjab, leading to deterioration in soil quality and declining growth in land productivity in these States,” the Survey said.

Further, it said that the recommendation of the Task Force for Direct Transfer of Subsidy to shift to a system of direct transfer of fertiliser subsidy farmers in a phased manner needs to be considered.

Published on July 09, 2014

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