The much-awaited nutrient-based subsidy (NBS) policy, which came into effect from April 1 with the objective of enhancing soil nutrition in the country, might turn out to be ineffective and unproductive for the farming community even as it was expected to reduce the government’s subsidy burden.
While large-scale use of chemical fertilisers have resulted in falling crop yield over the last few decades, the basic technological upgrade needed for soil improvement has not happened, complain farmers and agronomists.
The policy is also aimed at reducing the use of urea. However, with urea still under a controlled pricing regime, it is not clear how the government plans to reduce farmers’ dependence on it. “Fertiliser companies are still selling urea everywhere even if farmers are demanding other type of fertilisers. Productivity of the soil can never be increased without proper use of green manures, which was never given importance. A farmer is losing 10-15 per cent on an average every year,” said Krishan Bir Chaudhary, president of the Bharatiya Krishak Samaj.
Chaudhary also points out that synthetic fertilisers need more water for irrigation. “The government has not done anything to improve the condition of the groundwater level,” he added.
The NBS policy is also expected to project the actual annual demand for fertilisers in the country, thereby resulting in realistic prices in the international market. But, while on one hand farmers have shrugged it off as bootless, analysts and experts have demanded more measures at the grass-roots level. “It is evident that the government is gradually going to do away with the fertiliser subsidy. However, under the new policy, the challenge would be to keep prices under control. Though the present structure cannot continue, affordability is going to be the main issue in the new system and this would certainly push the food prices further up, adding to inflation and ultimately consumers would have to bear the burden,” said Shashanka Bhide, senior research counsellor, National Council of Applied Economic Research.
A few days before the Budget 2010-11, the government allowed a 10 per cent increase in the farm-gate prices of urea to Rs 5,310 a tonne. According to Crisil Research, this would help the government reduce its subsidy burden by Rs 13,000 crore-Rs 14,000 crore. The government’s fertiliser subsidy bill stood at Rs 52,980 crore during 2008-09.
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Under the NBS policy, the government has decontrolled prices of 18 other fertilisers though it has been maintaining that it would not let fertiliser prices increase by more than 5 per cent of the present price level. Under the policy, the subsidy level will be determined on macronutrients like nitrogen (N), phosphorous (P) and potassium (K), and secondary nutrients like sulphur (S) and micro nutrients such as zinc and boron.
Some experts believe that the fertiliser policy would spell disaster especially for the small and marginal farmers who are debt-ridden and are facing severe crisis in terms of low productivity, drought and floods. According to activist and environmentalist Vandana Shiva, the NBS policy would herald another phase of severe agrarian stress. “We have seen what happened to the seeds sectors. The same kind of cartelisation would come into effect in the fertiliser sector, leading to farmers’ debt and suicides,” she said.
According to Devinder Sharma, a Delhi-based food and trade policy analyst, fertiliser could soon be out of the reach of farmers. “All these years, the government could not keep a watch on food prices. How can it check the fertiliser prices? This policy is not meant for promoting balanced fertilization of the soil. Rather it is only intended at reducing the government’s subsidy burden. Under the policy, prices of fertilisers are bound to go up and very soon would be out of the reach of the farmers,” said Sharma.
A senior official of the Ministry of Chemicals and Fertilisers, however, maintained that the NBS was not aimed at reducing subsidy. Besides, with free pricing, though with some control, companies might offer the best to farmers.
Sharma too sees a bright side to the NBS. According to him, the new system could spell good for farmers as excessive use of chemical fertilisers has damaged the productivity of the soil. “Once these products go out of their reach, they would be bound to look at other indigenous method of enhancing the productivity of soil,” he said.