New Delhi: The government has set up a Group
of Ministers under Finance Minister Pranab Mukherjee to take
up the issue of overhauling the fertiliser subsidy policy and
shifting towards a regime of providing the dole-out directly
to farmers.
The Budget 2009-10 had announced moving towards a regime
where subsidy would be granted on nutrients (like N, P, K that
go into the making of fertilisers) instead of the current
practice of providing dole-out on prices of fertilisers.
It had also proposed the government's long-term goal of
supplying fertiliser subsidy directly to farmers instead of
routing it through the industry.
"A GoM has been constituted under the chairmanship of
Pranab Mukherjee to look into all aspects of nutrient-based
subsidy," a top government official told PTI, who did not wish
to be named.
The GoM will decide on when to shift to the new subsidy
regime and also the time frame for moving to the system of
direct subsidy to farmers, he added.
Already, the Fertiliser Ministry has convened meetings
with senior officials from different states and the industry
separately to "sensitise" them about the proposed system.
At present, the government controls the pricing of key
fertilisers and offers funds to companies, known as fertiliser
subsidy, to compensate them for selling key farm nutrients at
the rates determined by it.
India's fertiliser subsidy surged to Rs 1,17,000 crore in
the last fiscal on unprecedented rise in its import bill
following skyrocketing global prices, from Rs 45,659 crore a
year before.
The record rise in subsidy bill paved the way for a fresh
debate among policy makers with the Fertiliser Ministry saying
such kind of a burden is not sustainable for a long time.
However, announcing the government's intention, Mukherjee
had said in the Budget the declining farm yields due to the
increased use of urea is "a matter of concern" and sought
to shift to the new regime to promote balanced application of
different fertilisers.
The industry had also hailed the Centre's decision to
provide subsidy directly to farmers, saying it will spare
fertiliser companies many troubles that are affecting their
books. Currently, the subsidy is routed through the industry.
The unshackling of the fertiliser manufacturing sector is
expected to attract fresh investment to the segment that has
not witnessed any significant inflow of funds, the Finance
Minister had said.
According to an official estimate, companies recover less
than 15 per cent of the actual cost of fertilisers by selling
at MRPs, while the rest is borne by the Centre.
Bureau Report
First Published: Monday, August 31, 2009, 17:38