Budget 2020-21: Expect direct benefit transfer for urea

Move to aim at controlling excessive urea usage and promoting zero-budget farming

By Jitendra
Published: Friday 31 January 2020
Photo: Vikas Choudhary / CSE

The Union government is likely to announce a direct benefit transfer scheme for urea subsidy in the 2020-21 Budget on February 1, a highly-placed source has told Down To Earth (DTE).

A 45-kg sack of urea currently retails for Rs 266.50, after subsidy. Without it, the price is Rs 450.

“The government has decided to transfer Rs 183.50 directly to farmers’ accounts that are linked with their biometric Aadhar numbers. This will be officially announced on February 1, in the annual budget,” a senior official who did not wish to be named, told DTE.

“The arrangement will be similar to the LPG subsidy system where consumers first pay the whole amount while the subsidy amount is returned to them by the government after a few months,” a manager of a major urea-producing company, who did not wish to be named, said.

The move aims to control excessive urea usage and promote zero-budget farming, according to the official.

The Centre had provided Rs 73,000 crore as fertiliser subsidy to the urea-based companies for 2018-19.

Urea scourge

The government took a number of measures to reduce urea consumption. It introduced neem-coated urea to reduce illegal diversion of urea for non-agricultural uses. It also stepped up the promotion of organic and zero-budget farming.

But none of these proved effective enough to stop excessive urea usage.

In fact, the country’s urea consumption in 2018-19 increased to 31.55 million tonnes (MT) from 29.95 MT in 2015-16, according to the Union Ministry of Chemicals and Fertilizers. While domestic production has remained almost static, import has increased by over 38 per cent. Urea import increased to 7.6 MT from 5.48 MT in the same period.

Soil degradation is major concern for India. A national database on land degradation in India shows that 120.7 million hectares (Mha) or 36.7 per cent of the total arable and non-arable land surface of the country suffers from various forms of degradation, with water erosion being its chief contributor in 83 Mha (68.4 per cent).

Degradation of soil health has also been reported due to long-term imbalanced use of fertiliser nutrients. The N : P: K use ratio (nitrogen, phosphorus and potassium) has become greatly skewed. Ideally, it should be 4 : 2 : 1.

However, in states like Punjab and Haryana, the usage of nitrogen (urea) is eight times of what is usually required. During 2014-15, 306 MT of urea was used in the two states, out of the total 485 MT fertiliser consumption in India.

The Fertiliser Association of India’s 2017 report shows a clear imbalance in the use of macro-nutrients, especially in the last three decades. The NPK ratio in 1990 was 6 : 2.4 : 1, in 2000, it was 7 : 2.7 : 1, in 2010, it was 4.7 : 2.3 : 1 and in 2016, this ratio was 6.7 : 2.7 : 1.

The situation is worse in agriculturally-important states like Punjab and Haryana where the NPK use ratio is as high as 31.4 : 8.0 : 1 and 27.7 : 6.1 : 1 respectively.

Even the pattern of fertiliser consumption is concentrated in a few select districts. Of the total 525 districts in India, about 292 districts (42 per cent) account for 85 per cent of the total fertiliser consumption. 

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