The Hindu Business Line : Infertile policy

A policy that does not ensure delivery of adequate quantities of fertilisers at affordable prices to peasants is unlikely to be sound and equitable.

When the UPA government’s performance is evaluated, agriculture is sure to stand out like a sore thumb. No doubt, in the last five years, credit flows have improved, farm debt has been waived, minimum support prices have been hiked and a National Food Security Mission has been launched; but unfortunately, all these do not add up to sustaining even a 4 per cent annual output growth. The structural issues have remained largely unattended; the policy for fertilisers, w hich has not delivered in the true sense, needs a thorough revamp. Given political and time constraints, the present government can do little; but the bureaucracy must use the interregnum before the next government takes charge to design an equitable policy that addresses the interests — often conflicting — and concerns of various stakeholders. The current regime is characterised by regulatory controls over production, distribution, products and prices. This results in elimination of market forces and often encourages rent-seeking. Although there is a move towards a market-linked subsidy mechanism to encourage efficiency in the sector and reduce the subsidy burden, a lot more thought needs to go into policy-making.

Primarily, at the national level, there is need to raise the per hectare use of fertilisers from the current level of about 110 kg to at least 125 kg/ha in a pre-determined time-frame. Second, the geographical skew in consumption needs to be reduced, if not eliminated. The third critical issue is nutrient imbalance. As is well known, there is excessive use of urea and a bias against micronutrients that has affected the soil profile. The current distortion in pricing and marketing of nitrogenous, phosphatic and potassic (NPK) fertilisers needs to be smoothened, so that farmers are persuaded to use the right blend of nutrients.

Importantly, the benefit of fertiliser subsidy should flow to the ultimate user, the farmer. Given that nearly 80 per cent of the farmers hold no more than one hectare of land each and are financially vulnerable, they must become the primary focus of policy attention. A policy that does not ensure delivery of adequate quantities of fertilisers at affordable prices to a vast majority of the resource-poor peasants is unlikely to be sound and equitable. Although it appears daunting, it is possible to use the system of Kisan Credit Cards (over 7 crore KCCs have been issued) and our prowess in information technology to ensure that farmers directly reap the benefit of subsidy. It will also save the fertiliser industry from a climate of uncertainty and facilitate movement towards more transparent and market-driven business.

Related Stories:
Fertiliser subsidy bill overshoots budget estimates
Fertiliser folly
Govt provides sops for fertiliser cos to switch to natural gas

More Stories on : Editorial | Fertilisers

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Climate: Countdown to Copenhagen

Infertile policy

Bustling temple town

Wanted: New growth model

Give crops balanced nutrients

Post hoc, ergo propter hoc: The Achilles’ Heel of economics

Research in RBI