Seeks scrapping of nutrient based subsidy policy

Chief Minister Jayalalithaa has demanded immediate withdrawal of the nutrient based subsidy (NBS) policy and restoration of the earlier system of fixing the maximum retail price (MRP) of fertilizers.

In a letter to Prime Minister Manmohan Singh on Tuesday, she stated that the introduction of the policy by the Centre on April 1, 2010, coupled with an unreliable supply of fertilizers to Tamil Nadu, was “threatening to deprive our farmers of their basic means of sustenance and livelihood”.

Pointing out that the annual consumption of chemical fertilizers in the State is about 28 lakh tonnes, she said that the policy had given the liberty to the manufacturers/importers of chemical fertilizers to fix the MRP based on their cost of production/import. Since then, the fertilizer companies had been hiking the retail price of fertilizers at will, causing extreme hardship to farmers.

Explaining how the price of fertilizers had gone up by two or three times, she said the increase had been steep since April.

Between April 17, 2012 and June 18, 2012, the MRP of a 50-kg bag DAP (di-ammonium phosphate) and MOP (muriate of potash) marketed by Indian Potash Limited had risen from Rs.910 to Rs.1200 and Rs.680 to Rs.840 respectively.

Giving details of increase in prices of various fertilizers by other producers, she said, “To add insult to injury, despite such a phenomenal increase in fertilizer prices in the current year, the Department of Fertilizers, GOI [Government of India], has reduced the subsidy for 2012-2013 for DAP to Rs.14,350 per MT [metric tonne] from Rs.19,763 per MT fixed last year, and for MOP to Rs.14,400 per MT as against Rs.16,054 per MT fixed last year.”

The Department of Fertilizers, which had also proposed a hike of another 10 per cent in urea prices, planned to cut subsidies further on the pretext of subsidising bio-fertilizers. “Faced with a steep price rise and having to digest a sharp reduction in subsidy, our farmers have been hit hard in terms of economic returns from farming.”

She said that the State government’s waiver of the levy of 4 per cent Value Added Tax (VAT) on the sale of fertilizers, effective July 12 last year, had given some relief to farmers.

On the problem of shortage of fertilizers, the Chief Minister said that while the DAP requirement for April to May 2012 was 48,000 MT, fertilizer firms supplied only 20,603 MT, resulting in a shortfall of 27,397 MT. In June 2012, the allocation of DAP was only 23,000 MT against the estimated requirement of 30,000 MT.

“I strongly urge you to immediately allocate the estimated full requirement of DAP to the State to meet the demand for the Kuruvai cultivation, which is already under way,” she said.

Despite the constraints of shortage last year, the State, “due to effective measures and timely steps taken by my government,” is expected to achieve an all-time record production of food grains of 103.85 lakh MT, she added.