At a time when fluctuating input prices have made it difficult for the fertiliser industry to sustain viable operations and sparked shortages for farmers, the Centre has come up with a draft Integrated Plant Nutrition Management Bill, 2022, that, if passed, will take the industry back to the Dark Ages of licences and controls. The Bill purportedly aims to promote the development and sustainable use of balanced fertilisers to sustain India’s food and nutritional security without causing adverse harm to the environment and health of the soil. It also aims to “simplify the process for the manufacture, production, distribution and price management of fertilisers” with stated objective of “improving the ease of doing business” while encouraging innovation. But a scrutiny of its provisions reveals that the Bill will end up doing the exact opposite, and it has little to do with the promotion of soil health, environment or even sustainable fertiliser use. Instead, it appears focused on tightening the already pervasive government controls over the fertiliser sector, by setting up an elaborate Inspector Raj to oversee it.

The Bill empowers the Centre with sweeping powers to cap the maximum selling prices for fertilisers, while allowing it to fix different prices for different regions and customers. The Centre will have powers to restrict the movement of fertilisers from one State to another and to dictate the quantities of fertiliser a manufacturer may sell in each State. To give effect to the draconian provisions, a sectoral regulator in the form of an Integrated Plant Nutrition Management Authority of India will be set up. States have been empowered to appoint State Controllers of Fertilisers and Fertiliser Inspectors, who can conduct impromptu inspections on industry and trade armed with overarching powers to search, seize and confiscate. Though some of the provisions of this Bill are derived from the existing Fertiliser Control Order, 1985 and the Fertiliser Movement Control Order, 1973 which it seeks to replace, its entire tone and tenor run counter to the long-held policy of reforming India’s fertiliser sector by freeing it from the shackles of government control. The industry rightly apprehends that the elaborate inspector Raj will encourage rent-seeking and hamper ease of doing business.

While the immediate provocation for this draft law appears to lie in the fertiliser shortages experienced recently, it can be argued that these shortfalls were the direct result of short-sighted and ad-hoc government policies. For long, India’s fertiliser industry has been hamstrung by government controls that allow the Centre to fix selling prices of fertilisers, including ‘decontrolled’ ones, far below actual production costs, leading to manufacturers and importers calibrating their supplies to the Centre’s subsidy announcements. Artificially low price caps on urea and higher prices for phosphatic fertilisers have actively encouraged skewed nutrient use. The solution to most of the sector’s woes lie not in adding to this labyrinth of controls but in the Centre stepping back completely from interventions in the product and pricing decisions of the industry and directly compensating farmers for nutrient use through cash transfers.

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