Budget 2020

Fertiliser Industry is best candidate for direct benefit transfer

With regard to the Fertiliser Industry, I have the following suggestions:

* There is a need to increase the urea price by at least 15 per cent. The current selling price of urea which is highly subsidised is almost one-fourth the world price. There is a potential over the next four years to increase urea price every year gradually so that the subsidy levels are reduced. Further due to the product being very cheap, there is excessive use of urea and this affects the soil. By increasing the price this can lead to more balanced fertilization and lower subsidy outgo.

* The Fertiliser industry is the best candidate for direct benefit transfer (DBT). Currently, the subsidy is paid through the fertiliser companies. This is totally unnecessary. If the farmers are given subsidy directly, this will not only stop leakage but will also avoid unnecessary paper work and red-tapism.

* Currently in the phosphatic sector, there is a cumbersome procedure to reclaim subsidy and freight. It is desirable to have freight merged into the subsidy so that there is only one stage of disbursement. A weighted average freight can be used for this purpose. Currently, freight bills have to be submitted separately and verified and then paid. All these results in a lot of paper work delay.

* The current move of the Government to grant support to organic compost is a welcome move as this ensures replacement of carbon into the soil thereby making it more conducive for farming.

* The major challenge in the farm sector relates to irrigation as the percentage of land under irrigation is still less than 20-25per cent and majority of Indian farmland is rain-fed or monsoon dependent. Investment in linking of rivers and building of canals to systematically increase irrigated area every year should be part of the budget.

* Single Super Phosphate (SSP) is the appropriate fertiliser for the small and marginal farmers. The current system of subsidy is not conducive to promotion of SSP usage. Countries like Brazil have used this cheaper alternative with some support rather than depend on imported di-ammonium phosphate (DAP). The whole policy towards SSP needs to be relooked. At least 3 million tons of SSP can be used in addition to the current usage. This will bring down imports of DAP by at least 2 million tons annually.

The author is the Executive Chairman of the Murugappa Corporate Board and the Chairman of EID Parry (India) Ltd.

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Printable version | Jun 1, 2020 4:23:23 AM | https://www.thehindu.com/business/budget/fertiliser-industry-is-best-candidate-for-direct-benefit-transfer/article8206342.ece

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