Deregulating Non-Subsidised Fertilisers
- July 13, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Deregulating Non-Subsidised Fertilisers
Sub: Economy
Sec: National Income
Urea, a crucial fertiliser, has had its maximum retail price (MRP) fixed since 2012 and is unlikely to be decontrolled or see a price hike soon.
Similarly, other non-urea fertilisers under the nutrient-based subsidy (NBS) regime, though technically decontrolled, face informal price controls.
Why Deregulate Non-Subsidised Fertilisers?
- Expand the Market:
- Deregulating non-subsidised fertilisers can help expand the market for innovative and high-efficiency fertiliser products.
- Reduce Bureaucratic Delays:
- The registration process for new fertiliser products in India is lengthy, taking an average of 804 days. Deregulation could streamline this process and make it easier for new products to enter the market.
- Encourage Innovation:
- By reducing regulatory barriers, companies can introduce new nutrient products more quickly, providing farmers access to advanced fertilisers used in other countries.
Case for Deregulation
- Current Fertiliser Sales:
- The majority of fertiliser sales are dominated by a few products, with 94% of overall sales in 2022-23 and 2023-24 comprising seven main fertilisers, including urea and DAP.
- Precedent in Water-Soluble Fertilisers (WSF):
- The government has already implemented a deregulation model for WSFs. These fertilisers, which are 100% soluble in water, can be applied through drip irrigation or spraying and are subject to automatic registration if they meet basic quality standards and labeling requirements.
- Potential Benefits of Deregulation:
- Increased Access to Innovative Products: Farmers could access the latest fertiliser technologies without waiting for prolonged registration processes.
- Higher Nutrient Absorption: WSFs and liquid fertilisers offer higher nutrient use efficiency compared to traditional bulk fertilisers, improving crop yield and quality.
- Cost Efficiency: While WSFs are more expensive, their higher nutrient absorption rates make them more cost-effective in the long run.
Implementation Challenges
- Quality Control:
- Ensuring that deregulated fertilisers meet minimum nutrient content and maximum contaminant limits is crucial. This requires robust enforcement mechanisms.
- Market Dynamics:
- Deregulation may affect the prices and availability of subsidised fertilisers, which could have implications for small and marginal farmers reliant on these subsidies.
About the PM-PRANAM Scheme (PM Programme for Restoration, Awareness, Generation, Nourishment, and Amelioration of Mother Earth) scheme
The main objective of the PM-PRANAM scheme is to reduce the use of chemical fertilizers by incentivizing states to adopt alternative fertilizers, thus encouraging a balanced use of fertilizers in conjunction with bio-fertilizers and organic fertilizers.
- Incentives for States:
- States that adopt alternative fertilizers will be incentivized with the subsidy saved by reducing the use of chemical fertilizers.
- Half of the subsidy savings will be passed on to the state that saves the money as a grant.
- Utilization of Grants:
- 70% of the grant can be used to create assets related to the technological adoption of alternate fertilizers and alternate fertilizer production units at the village, block, and district levels.
- 30% of the grant can be used to reward and encourage farmers, panchayats, and other stakeholders involved in fertilizer reduction and awareness generation.
- Evaluation Mechanism:
- The government will evaluate the utilization of fertilizers in terms of increase or decrease in overall consumption in a year vis-a-vis consumption over the past three years.
- The Integrated Fertilizers Management System (iFMS) will be the platform used to track the use of fertilizers.
Funding Mechanism:
- The PM-PRANAM scheme will not have a separate budget.
- It will be financed by the savings from existing fertilizer subsidies under current schemes.
- The scheme ensures that the saved subsidies are used effectively to promote the adoption of alternative fertilizers.
The PM-PRANAM scheme is a significant initiative aimed at promoting sustainable agriculture by reducing the reliance on chemical fertilizers and encouraging the use of bio-fertilizers and organic fertilizers.