reform

Why Fertilizer Sector Of India Needs Reformation – Free PDF Download

 

The Observation

  • India is the second-largest user of fertilizer in the world, after China.
  • Subsidies on fertilizers in India were introduced more than 40 years ago to make them affordable to farmers and ultimately, to ensure food security for the country.
  • The subsidy bill of Indian government has been growing exponentially over the years.

The Problem Areas

  • For 2021-22, the Union Budget has estimated fertilizer subsidy at 79,530 crore (from Rs. 66,468 crore in 2017-18).
  • Please note the actual amount is likely to be much higher than the estimate due to the recent upsurge in the prices of energy, the international prices of urea and other fertilizers, and India’s dependence on imports.

The Problem Areas

The Problem Areas

The Problem Areas

  • The central government launched the nutrient based subsidy policy (NBS) in 2010 for P and K fertilizers.
  • The policy was formulated with the objective of promoting a balanced use of N, P and K fertilizers.
  • The policy allowed the manufacturers of P and K fertilizers to fix their maximum retail prices (MRPs) at reasonable levels. The subsidy provided would be based on per kilogram of the nutrient.

The Problem Areas

  • The agreed ratio of NPK elements for balanced soil health and crop growth is 4:2:1 but the average ratio of NPK use in India is 8.2:3.2:1
  • This also is heavily skewed in different states ranging from 33.7:8.0:1 in Punjab and 1.3:0.7:1 in Kerala in 2019-20.

The Problem Areas

  • Other problems connected to Urea Overuse
    1. No denial policy leads to unintended beneficiaries & black marketing of fertilizers especially Urea.
    2. Heavy use of Urea causes soil infertility & environmental degradation including ground water pollution. It also causes health impacts Blue baby syndrome.

The Problem Areas

  • Heavy dependence on Imports
    1. The total demand for urea in the country is about 34-35 million tonnes – Domestic Production is about 25 mT
    2. The total demand for DAP- Diammonium Phosphate is about 12 mT – Domestic production is about 5 mT.
    3. The total demand for Muriate of Potash is about 3 mT – This is entirely imported.
    4. In demand for complex fertilizers (NPK) is about 12-13 mT which is largely produced within the country.

Note: The international prices of fertilizers are volatile and almost directly proportional to energy prices.

What should be done?

THE SUGGESTIONS

  • Self reliance in fertilizer production
    • Five urea plants at Gorakhpur, Sindri, Barauni, Talcher and Ramagundam are being revived
  • Rationalization of Subsidy policy
    • First step towards this could be bringing Urea under NBS
  • Alternative nutrition for plants
    • Non chemical fertilizers, Compost, Organic/Bio Fertilizers etc
  • Enhance Fertilizer efficiency

Nano Urea shows efficiency..!!

 

 

 

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