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India’s urea consumption is set to drop for the first time in five years due to various factors including lower availability caused by cut in import, potentially indicating a policy shift towards capping the supply to ensure balanced use of fertilisers.
The fertiliser consumption was nearly 322 lakh tonnes (lt) during April-February of the current fiscal and even if it remains around last year’s level this month, it will not exceed 342 lt for the entire 2021-22 against actual sales of 350 lt last year, industry sources said.
“When the government introduced 45 kg bags in 2018 (against existing 50 kg), the objective was to reduce urea consumption by 10 per cent. However, it increased by 5 per cent during 2018-19, which was the same growth level as in 2011-12. It further increased by 7 per cent in 2019-20,” an industry official said.
It shows that as subsidy increases every year, the urea sector cannot sustain unless there is a cap on its use.
The current retail price of ₹266.5/45 kg bag may be continued under the proposed urea policy for another two years. The actual price of urea ranges from ₹1,000 to ₹2,000 for a bag of 45 kg. “The Ministry of Finance and EFC may be asked to extend the present urea subsidy scheme beyond March 31, 2022 as recommended in the Third Party Evaluation Report. This recommendation may also be shared with the Ministry of Finance for its consideration,” according to the parliamentary Standing Committee report placed in Parliament on March 21.
Subsidy scheme
The “Third Party Evaluation” conducted on urea subsidy has recommended that there is necessity for continuation of the subsidy scheme to help the industries, farmers and the agriculture sector as it has a great impact on agricultural sector in increasing crop yield and reducing the expenditure of farmers for cultivation.
Limited imports
Sources said urea import during April-February was around 80 lt and there is little chance of further increase as both China and Russia have restricted their exports. India had imported 98.3 lt of urea during 2020-21.
When the reduction of weight in urea bag fail, nor the soil health card contributed to any drop in urea usage, there are two alternatives left and since price increase is politically sensitive, capping is the only option left to achieve balanced use of fertilisers. Farmers tend to use more of urea as it is the cheapest crop nutrient. The government recently told the parliamentary panel “it is a misnomer that if one uses Soil Health Card, then the fertiliser consumption will be reduced.”
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