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LATEST NEWS UPDATES | Reforming the fertilizer sector -Ramesh Chand and Yogesh Suri

Reforming the fertilizer sector -Ramesh Chand and Yogesh Suri

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published Published on Nov 23, 2021   modified Modified on Nov 23, 2021

-The Hindu

In order to address the multiple goals of fertilizer policy, India needs to work on four key areas

Since 1991, when economic reforms began in India, several attempts have been made to reform the fertilizer sector to keep a check on the rising fertilizer subsidy bill, promote the efficient use of fertilizers, achieve balanced use of N, P, and K (nitrogen, phosphorus, and potassium), and reduce water and air pollution caused by fertilizers like urea.

Increase in subsidy

The Economic Survey of 1991-92 noted that fertilizer prices remained almost unchanged from July 1981 to July 1991. The Union Budget of July 1991 raised the issue prices of fertilizers by 40% on average. But from August that year, this was reduced to 30%, and small and marginal farmers were exempted from the price increase. The Economic Survey further noted that even with this 30% increase, fertilizer subsidy remained substantial and needed to be reduced further. Due to opposition to increase fertilizer prices, the increase in the price of urea was rolled back to 17% a year later over the pre-reform price.

This change disturbed the relative prices of various fertilizers and resulted in a big shift in the composition of fertilizers used in the country in favor of urea and thus N. The ratio of use of N:P:K increased from 5.9:2.4:1 in 1991-92 to 9.7:2.9:1 in 1993-94. Farmers tended to move towards balanced use, but policy and price changes reversed the favorable trend a couple of times in the last three decades. Thus, little success has been achieved on any of the three fronts. Rather, there has been an uncontrolled increase in subsidies on urea, due both to almost freezing the MRP of urea in different time periods and its rising sale leading to an increase in an indiscriminate and imbalanced use of fertilizers.

Concerned with the adverse environmental impact of certain chemical fertilizers, some sections of society suggest the use of organic fertilizers and biofertilizers instead. There is a growing demand to provide subsidies and other incentives for organic fertilizers and biofertilizers to match those provided for chemical fertilizers.

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The Hindu, 23 November, 2021, https://www.thehindu.com/opinion/op-ed/reforming-the-fertilizer-sector/article37634302.ece?homepage=true


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