PRANAM Scheme to reduce fertiliser subsidy bill

August 31, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

PRANAM Scheme to reduce fertiliser subsidy bill

Subject :Schemes

Section: Environment

Context:

PM-PRANAM (PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth) was launched in the Union Budget 2023–24 to promote the balanced use of chemical and alternative fertilisers, generating awareness of regenerative agriculture (RA).

What is regenerative agriculture (RA)?
- RA is an outcome-based food production system that nurtures and restores soil health, protects the climate and water resources and biodiversity, and enhances farms’ productivity and profitability.
It is worth noting that the subsidy burden on chemical fertilisers is about ₹2.25-lakh crore for FY 2022-23, which is 39 per cent higher than FY 2021-22’s figure (₹1.62-lakh crore).
How can PRANAM help in reducing subsidy?
- PRANAM will help the government reduce subsidy bills and fiscal deficits if it picks up, by reducing the extent of chemical fertiliser use.
- For change to happen the efficacy of alternative fertilisers to enhance crop yield or productivity needs to be proved.
- A gradual phase-out of subsidies on chemical fertilisers can stimulate alternative or bio-fertiliser adoption.
- The retention pricing scheme, which safeguards chemical fertiliser (urea) manufacturers, can be phased out to promote alternative fertiliser production.
Promoting PRANAM:
- Demonstrating alternative fertilisers on farmer fields is critical, especially after the Sri Lankan food crisis, to showcase higher productivity.
- A certification process for such products can help farmers or their organisations realise a remunerative price.\
- 10,000 Bio-Input Resource Centres are being set up over the next three years, creating a national-level distributed micro-fertiliser and pesticide manufacturing network.

The Retention Pricing Scheme (RPS)

RPS was introduced in November 1977 in the wake of the increase in crude oil prices in the early seventies when the prices of both imported fertilisers as well as fertiliser feedstock (naphtha) increased substantially.
This led to a decline in the consumption of fertilisers and the government, in order to help build indigenous fertiliser capacity and boost fertiliser consumption set up a committee under Mr. Marathe. The outcome of the recommendations of the committee was the RPS.
The scheme works as follows:
- The selling prices of the fertiliser are fixed by the government and so are the retention prices for the producers.
- The difference between the higher retention price for the producer and the lower selling prices are paid to the producers by the government.
- These are based on covering the variable cost and fixed costs and giving a return of 12% on the net worth. Not all producers are entitled to the same price however.
- The retention price paid varies between plant to plant and depends on the feedstock used (whether naphtha, fuel oil, gas or coal) and takes into account the conversion costs, selling costs, interest on debt, depreciation and capacity utilisation of the plant itself.

Bio-Input Resource Centres

In order to involve more farmers and enhance the reach of natural farming on a larger scale, Government has formulated the Natural Mission on Natural Farming (NMNF) by up-scaling the Bharatiya Prakritik Krishi Paddhati (BPKP) to promote natural farming across the country.
With NMNF Government proposes to touch 1 crore farmers along the Ganga belt and in other rainfed parts of the country.
For making easy access to bio- resources like Jeevamrit, Ghana Jeevamrit, neemastra etc., Government intends to set up 15,000 Bhartiya Prakritik Kheti Bio-inputs Resources Centres (BRCs):
- To provide farmers adopting natural farming an easy access to bio resources like Jeevaamrit, Ghana Jeevamrit, neemastra etc. wherein cow dung and urine, neem and bio culture play an important role.
- The Bio-inputs Resources Centres (BRCs) to prepare and supply bio-inputs to facilitate the adoption of natural farming without individual farmers having to prepare them on their own, as preparation of bio-inputs is a time taking and labour- intensive activity.