Centre debates remodelling fertiliser subsidy

By Savvy Soumya Misra
Published: Wednesday 31 October 2007

Government debtes remodelling< (Credit: SOPAN JOSHI / CSE)After decades of promoting urea to increase soil fertility, the government has begun to acknowledge that it has achieved quite the opposite. The fact is soil fertility in parts of India is declining because of excessive and imbalanced use of fertilizers. And this confession has come from none other than Kanti Lal Bhuria, union minister of state for agriculture. On August 31, Bhuria admitted in the Rajya Sabha that "there were instances of deterioration of soil fertility and nutrient deficiency in some parts of the country, especially the Indo-Gangetic Plain".

To address this problem, the government is planning to modify the fertilizer subsidy, taking into account soil ecology. At present, it subsidizes a particular fertilizer, irrespective of its nutrient content and combination. The result is farmers end up using mostly urea, which is heavily subsidized.These fertilizers, however, do not supply all the nutrients and their prolonged use leaves the soil deficient in other minerals, causing soil fatigue. So the government is debating a switch to a nutrient-based subsidy from the current product-based subsidy. Under the new regime only the fertilizer's nutrient constituents, such as nitrogen and phosphorus, will be subsidized.

At the second Fertilizer Advisory Forum held in Delhi in August, Ram Vilas Paswan, the union minister for chemicals and fertilizers, claimed there was a consensus across ministries on the new subsidy. A group of ministers headed by Union Agriculture Minister Sharad Pawar is discussing the shift. The move has not come a day too early. "Soil scientists have been demanding a nutrient-based subsidy for a long time. It is only now that the government has woken up to this problem. It should have dealt with it 15 years ago," says Y P Abrol, former Indian Agricultural Research Institute scientist and founder member of the India Nitrogen Group.
Imbalance and correction Under the present system there is a direct subsidy on urea. This means the government fixes its price, which is very low. Then there is the notified subsidy on other fertilizers, including di-ammonium phosphate (dap) and muriate of potash (mop), under which the government gives an indicative upper-limit price (see box Subsidy regime).

While this system allowed the government to keep fertilizer prices lower than production costs, this led to their imbalanced use in two ways. One is the overuse of urea against dap and mop. The second is the overuse of primary nutrients--nitrogen, phosphorus and potassium--against secondary nutrients and micronutrients, such as zinc, sulphur, gypsum, copper sulphate, ferrous sulphate, calcium and boron. Secondary and micronutrients, which are required in small quantity play a crucial role in maintaining soil fertility, are completely ignored.

The nutrient-based subsidy can give the farmers the incentive to use other fertilizers more suitable to the soil and crop requirements. There is a need to educate farmers about the nutrient requirement of the soil according to its type, crops and nutrients already available in it, says G S Mangat, chairman, National Fertilizers Limited (nfl).

Under the nutrient-based subsidy, a wide variety of soil-specific, crop-specific and region-specific fertilizers will be available to the farmers, explains a senior official at the union ministry of chemicals and fertilizers. "This regime will encourage the use of secondary and micronutrients," he adds.

Once the new subsidy regime is cleared, it will enable fertilizer companies to roll out a range of nutrient-based products as well as ensure price stability for nutrients. So, at present if farmers are paying Rs 105 for a unit of nitrogen in urea and more in some other product, under the new regime subsidy for nitrogen will be fixed across products.

The product-based subsidy did not ensure judicious use of fertilizers despite the government allocating thousands of crores of rupees on subsidies every year. For the current fiscal, the government has allocated Rs 22,532 crore as fertilizer subsidy, while the requirement, according to Paswan, is close to Rs 48,000 crore. Agricultural economists at the Fertiliser Association of India (fai), however, say that heavy subsidies have failed to translate into agricultural growth. According to the data available with fai, the yield of rice, wheat, pulses and groundnut actually declined moderately from 2003-04 to 2004-05.

The next step
Fertilizer companies, including iffco and nfl, believe tweaking the subsidy policy can do the trick. It can, provided it is accompanied by logistic support to farmers, like training, dissemination of right information and enough soil-testing laboratories.

Although the government claims its soil-testing facilities across the country are doing a remarkable work, experts do not agree. According to fai, there are 609 soil-testing labs in the country; 571 owned by state governments and 38 by the fertilizer industry. "The facilities available are grossly inadequate considering the agricultural land cover in India. Moreover, these labs have no facility for testing micronutrients in the soil. This could also be one of the reasons micronutrients have been ignored for so long," said an fai official on condition of anonymity.

State governments will have to ensure that farmers are updated on the requirements of their crops and the soil. Dissemination of information will require manpower. At present, the strength of the field staff is inadequate. The government also needs to hammer out rules to ensure that the companies provide the right combinations and more varieties of fertilizers, rather than churning out combinations fetching high subsidies.

Pollution factor
There is another reason the product-based subsidy needs to be phased out. The lopsided use of chemical fertilizers can lead to soil pollution. Nitrogenous fertilizers are a source of agricultural greenhouse gases and leaching of these fertilizers in groundwater causes health hazards (see box Dirty nitrogen). "The Green Revolution ushered in excessive use of fertilizers and since initially it gave good yields, farmers have been following it recklessly. We need to address the harm done by the mindless pumping of nitrogen in the soil," says soil scientist Abrol.

According to fai's Fertiliser Statistics, the consumption of nitrogen fertilizers in India has increased from less than .05 million tonnes in 1950-51 to 11.7 million tonnes in 2004-05. India is the third largest consumer of nitrogenous fertilizers (after China and the us) in the world. "The demand for nitrogenous fertilizers is likely to rise to 20 million tonnes by 2010 in the country, and so will the problems related to the excessive use of nitrogen," warns Abrol. But for the present, fai thinks fertilizer use in India has not reached a point where it could pollute the soil.

Does this argument apply to Punjab, the highest user of chemical fertilizers in the country? The state alone accounts for 10 per cent of the total fertilizers used in India, though it has only 4.2 per cent of the total cropped area. According to the centre-funded State of Environment Report (Punjab), use of nitrogen increased from 1,254,600 mt in 2005-06 to 1,299,000 mt in 2006-07, while the use of phosphorous and potassium fell during the same period.

The state administration is not worried. "Excessive use of urea has not affected soil fertility. In fact, it is the cropping intensity," says Harwinder Singh Bhatti, joint director, agriculture (inputs), Punjab. While there is no consensus on fertilizers causing soil pollution in India, there are enough reasons to use them economically.

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