CACP recommends bringing urea under NBS

Subject : Economy

Section: Monetary Policy

Key Points:

CACP has recommended the Centre to bring urea under the nutrient-based subsidy (NBS) regime to address the problem of imbalanced use of nutrients.
Main cause of the nutrient imbalance is price distortions resulting from fertilizer subsidies, which have grown dramatically and continue to increase rapidly
Impact of imbalance in prices:
- Fertilizer response and efficiency has continuously declined over decades mainly due to imbalanced use of nutrients, deficiency of micro and secondary nutrients
- Overuse of Urea resulting in depletion of soil organic carbon
- Increasing fertilizer subsidy
It also recommended a cap on the number of subsidized bags of fertilizers per farmer, as has been done for subsidized LPG cylinders.
For Kharif season 2023-2024, the government approved Rs 1.08 lakh crore as fertilizer subsidy on May 17, 2023. Out of this, Rs 70,000 crore will be spent for urea subsidy and Rs 38,000 crore for subsidy for DAP and other fertilizers.

Present system of pricing of Fertilizers in India

Urea does not come under NBS, which includes non-urea fertilizers like phosphorus and potassium.
Manufacturers of these fertilizers have the freedom to fix MRP within “reasonable limits”, and a fixed per-tonne subsidy linked to their nutrient content is given.
Government has direct control over MRP of urea and its subsidy.

Other Recommendations of CACP:

encouraged to increase production of oilseeds and protected against uncontrolled imports through dynamic tariff structure linked to world prices, demand-supply situation and domestic prices of edible oils linked to MSP of oilseeds
duty differential between crude and refined oil may be raised to about 10-15 per cent to discourage import of refined oils
to reduce the import dependence, the CACP has recommended that the National Mission on Edible Oils (NMEO) should be launched with a special focus on major oilseeds such as rapeseed & mustard, groundnut, soybean, sunflower seeds
To promote the production and consumption of millets, it has recommended a two-pronged strategy to address both supply and demand side challenges.
- It has recommended an increase in production of millets through genetic improvement, strengthening seed chain, improved agronomic practices and enhanced shelf-life through value-addition,
- Demand creation by including millets in the public distribution system and other welfare schemes, industrial usage of millets and exploiting export market opportunities.