Remodelling India's fertiliser subsidy

Published: Wednesday 31 October 2007

india's fertilizer subsidy for 2007-08 is worth Rs 22,532 crore, which is estimated to be less than half of the requirement. So should the fertilizer subsidy be doubled? Or is it time to think through the model of fertilizer subsidy, as the union government is finally doing (see News Govt debates remodelling fertiliser subsidy)? Any decision will have a direct bearing on the fate of India's farmers as well as the country's food security.

For such an important aspect of the country's economy, fertilizer has never got its due in government budgets. All discussions on fertilizers have been limited to how the subsidy is to be administered--the larger, crucial point about soil health and fertility has never attracted mandarins' attentions. Despite warning signals for about two decades that overuse of urea was ruining the soil, politicians have been too scared to confront the problem. For them the fertilizer subsidy is an important component of 'sops' they can offer the electorate. (It has been well established for a long time that the subsidy actually lines the pockets of the fertilizer industry rather than farmers.)

All the government's monetary calculations never put an adequate price on soil health. The reason is the mindset that the soil is like a machine, the more fertilizer you apply the greater the production. It is not that the farmers were innocent bystanders; it is they who overused urea over decades. But the encouragement came from a mindless subsidy.

Numerous scientists have warned about the consequences of urea for a good number of years. But even today, the government is merely debating the remodelling of the subsidy on the basis of soil nutrients, taking soil ecology into account. If this overdue effort is to make any headway, it has to be pursued with the same intensity that was displayed when fertilizers were introduced to increase food production in the country. That could prove to be difficult, though, because there is no industry that has an interest in pushing the soil-fertility packet, and there are large commercial interests that stand to gain from continuing with the existing subsidy model. What change would require is a few committed bureaucrats whose feedback channels are not restricted to the fertilizer industry's diktats. The coming months will show whether the agriculture ministry has a few good men.

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