Liberalise, do not bureaucratise

The proposed fertiliser statute might be problematic

The draft Integrated Plant Nutrition Management Bill, 2022, put forth by the government for public comments, has caused a good deal of disquiet among various stakeholders in the fertiliser sector. It is being viewed largely as a bid to further tighten the government’s hold over a sector which is already over-regulated. The plea mooted for bringing this legislation — to ensure balanced use of plant nutrients — does not carry much conviction. For, the use of plant nutrients by farmers is influenced mostly by their prices, which are determined by the subsidies the government offers on different fertilisers. The present over-use of urea is, indeed, the result of higher subsidy on it vis-a-vis phosphatic and potassic fertilisers. This imbalance can be corrected by rationalising subsidies and not by enacting a new law.

At present, the fertiliser sector is governed by two broad-ranging executive orders — the Fertiliser Control Order (FCO), issued and administered by the agriculture ministry, and the Fertiliser Movement Order (FMO), promulgated and enforced by the fertiliser ministry. These measures together regulate the allocation and movement of fertilisers right from the manufacturing plants and ports to the sale outlets, according to the assessed requirement of different states. The inclusion of the existing provisions of these orders in the planned single statute might add to the confusion because the production of fertilisers comes under the fertiliser ministry but their allocation to different states is decided by the agriculture ministry.

However, the most worrisome feature of the Bill is the proposed revival of the post of fertiliser inspector with sweeping powers. Inspectors would be entitled to enter and search the premises of any player in the fertiliser sector and confiscate the stocks if they have “reasons to believe” that any part of the law has been infringed. Worse still, the Bill provides for hefty fines and jail terms for the violators. This, obviously, is tantamount to resurrecting the dreaded “Inspector Raj” as it existed prior to economic liberalisation in 1991.
 

The Bill also provides for creating an Integrated Plant Nutrition Management Authority of India, supposedly a technical body, to oversee registering fertiliser manufacturers, lay down quality standards, incentivise developing innovative products, and ensure balanced and sustainable use of plant nutrients. Going a step further, it empowers the Centre to fix the maximum price at which fertilisers would be sold to the farmers. However, the downside of this otherwise seemingly inoffensive provision is the stipulation that these prices would differ for different consumers or classes of consumers in accordance with the local situation and period of storage of fertilisers. This would needlessly complicate the process of fertiliser pricing, besides widening the scope for discretion.

This apart, the envisaged law, for some inexplicable reasons, seeks to bring the traditional plant nourishment products also under price control and controls of other kinds. It means that desi soil fertility-enhancers and crop yield-boosters, such as “Pachgavya Krishi” and “Amritpani”, also come under the bureaucratic controls and inspectorial scrutiny. This is unnecessary. Thus, the proposed fertiliser statute seems, on the whole, an ill-advised measure that might create more problems than it seeks to resolve. The need is to liberalise this sector and give subsidies directly to the farmers. The government would, therefore, do well to revisit and, preferably, retract its move.