Tamil Nadu Chief Minister Jayalalithaa on Thursday demanded that Union Fertilisers and Chemicals Minister M.K. Alagiri be dismissed from the Cabinet and a CBI investigation be ordered into what she suspected was a scam involving Rs. 1,000 crore as windfall profits to fertiliser manufacturers.

In a statement released here, Ms. Jayalalithaa cited media reports to say that the government’s nutrient-based subsidy scheme introduced in 2010 appeared to be a ruse to enable fertiliser makers to make huge profits and sell key fertilisers such as di-ammonium phosphate and muriate of potash at inflated prices to farmers.

She said media reports had stated that Union Minister of State for Fertilisers, Srikant Jena, had put up a note to his Cabinet minister last year, drawing his attention to companies making between Rs. 4,000 and Rs. 5000 per tonne as profit on DAP and about Rs. 6,000 per tonne on complex fertiliser. He had also informed Mr. Alagiri by another letter that companies had obtained favourable orders from the ministry to move fertilisers to the market well before the season’s needs arose, as they anticipated a cut in food subsidy in 2012-13 and feared a fall in fertiliser prices in the international market. Ms. Jayalalithaa said that according to media reports, Mr. Alagiri had not acted on these notes.

She recalled that she had written to the Prime Minister in June 2012, explaining that the government’s new policy of giving nutrient-based subsidy was severely affecting farmers and demanding that the old policy of having a stable maximum retail price be restored. However, there was no action on her letter.

Giving details of alleged profiteering by fertiliser companies, she said DAP had been sold in the market at a retail price of Rs. 25,000 per tonne in June 2012 and the subsidy given by the government was Rs. 14,300 per tonne. At the same time, the price of imported DAP was only Rs. 31,900. Even after accounting for transport and distribution expenditure, the companies would have made a profit of Rs. 5,000 per tonne, she said. In the case of MOP, the companies availed of a subsidy of Rs. 16,054 per tonne and ended up making a profit of Rs. 5,500 per tonne.

When asked about these matters, Mr. Alagiri reportedly replied “Go and ask the Prime Minister,” she quoted media reports as saying and wondered whether “the nutrient-based subsidy scheme has been introduced only to indulge in corruption.”

As companies seemed to have gained Rs. 1,000 crore in the name of government subsidy, a corresponding loss had been caused to the government and farmers, Ms. Jayalalithaa said.

She demanded that the Prime Minister remove Mr. Alagiri from the Cabinet and order a CBI probe to unearth the full details of the scam and initiate criminal action against those involved. 

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