Finance Bill passed; FM defends change in fertiliser subsidy...

Quashing criticism over the changed structure of fertiliser subsidy, Finance Minister Pranab Mukherjee today argued the price of urea was increased to ensure farmers got the subsidy at the maximum retail price and more investment flows into the sector.

“Prices of certain fertilisers have increased, but those of others have come down,” Mukherjee told the Rajya Sabha during debate on the Finance Bill. By providing a subsidy of Rs 49,981 crore for fertilisers, the finance minister pointed out he had enhanced the fertiliser subsidy this year and not withdrawn it. The government also argued this step was taken to give incentives to the sector and boost the companies. “It is being provided to the producers and there is no incentive for the producers to make investment in fertiliser production and improving its technology. Anybody can see what has been the state of fertiliser companies. Over the last few years, there is no incentive because prices are assured,” Mukherjee said.

With the Rajya Sabha approving the Bill and sending it back to the Lok Sabha, Budget 2010-11 stands passed by Parliament. It now requires Presidential assent before the provisions are notified.

According to the finance minister, as the companies were assured of their profits, there was no need for incentives for having fertiliser production units. “I have talked to all the fertiliser suppliers to ensure the availability of fertilisers. I can assure you that availability is there. Farm contacts have been established for the import and time schedule has been fixed so that there is no dislocation. In order to ensure that the prices remain at the current level, I have already indicated a quantum of about Rs 49,000 crore,” Mukherjee said.

Ahead of the launch of the government’s flagship food security programme, Mukherjee also emphasised on the improvement of the delivery mechanism and maintained that the states and the Centre would have to work together for it. “There is no doubt that there is a great deficiency in the delivery mechanism. Who is going to improve it? Nearly 787 Members of Parliament or 78 Members of the Council of Ministers... it is not possible. Theoretically, it may sound nice. At every stage, starting from Lok Sabha to Gram Sabha, at different stages in the process of implementation, we shall have to work in close cooperation,” he added.

Defending his government’s role in containing the price rise, Mukherjee argued “adequate remunerative prices” need to be given to the farmers. “If they don’t produce, how are we going to feed 1.2 billion people? Therefore, it is essential that we must enhance the remunerative price, we must enhance the procurement price and we must procure adequately,” he said.

As the Opposition parties emphasised on a stronger public distribution system (PDS), the finance minister put the ball in states’ court. “We are highly subsidising the prices which ought to be distributed through PDS. You may blame me. You may raise the accusing finger. But, sitting from the Centre, it is not possible to run PDS by any Central ministry. Primarily, it is the responsibility of the state governments,” he said.