With urea and fertilizer prices shooting up in the wake of Russia’s invasion of Ukraine, the Union Cabinet approved an enhancement in subsidies on non-urea fertilisers for the upcoming Kharif crop, to ₹60,939 crore.

What is the news?

• The government fixes the retail price of urea and subsidises producers based on the difference between costs and the fixed selling price.
• It pays a subsidy to non-urea fertiliser makers on the basis of nutrient-based rates.
• The increase in the prices of Di-ammonium phosphate (DAP) and its raw material is in the range of about 80%.

Fertilizer Subsidy in India

• Subsidy as a concept originated during the Green Revolution of the 1970s-80s.
• Fertiliser subsidy is purchasing by the farmer at a price below MRP (Maximum Retail Price), that is, below the usual demand-and-supply-rate, or regular production and import cost.

How is the subsidy paid and who gets it?

• The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
• From March 2018, a new so-called direct benefit transfer (DBT) system was introduced, wherein subsidy payment to the companies would happen only after actual sales to farmers by retailers.
• With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.

How does this system work?

• A popular example of how this system works is that of the neem coated urea fertiliser.
• Its MRP (Maximum Retail Price) is fixed by the government at Rs. 5922.22 per tonne.
• The average cost of domestic production is at Rs 17,000 per tonne. The difference is footed by the centre in the form of subsidy.
• This fertiliser has high Nitrogen content and is cheaper than usual fertilizers.
• While this may be perceived as a good thing, excess of Nitrogen can disrupt the NPK (Nitrogen, Phosphorus and Potassium) balance in the soil.

What about non-urea fertilizers?

• The non-urea fertiliser is decontrolled or fixed by the companies.
• The non- urea fertilizers are further divided into two parts, DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).
• The government pays a flat per tonne subsidy to maintain the nutrition content of the soil, and ensure other fertilizers are economical to use.

Issues with such subsidies

• A flawed subsidy policy is harmful not just for the farmer, but to the environment as well.
• Indian soil has low Nitrogen use efficiency, which is the main constituent of Urea.
• Consequently, excess usage contaminates groundwater.
• The bulk of urea applied to the soil is lost as NH3 (Ammonia) and Nitrogen Oxides. The WHO has prescribed limits been breached by Punjab, Haryana and Rajasthan.
• For human beings, “blue baby syndrome” is a common side ailment caused by Nitrate contaminated water.

Try answering this PYQ:

Q.What are the advantages of fertigation in agriculture? (CSP 2020)

1.Controlling the alkalinity of irrigation water is possible.
2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
3. Increased availability of nutrients to plants is possible.
4. Reduction in the leaching of chemical nutrients is possible.

Select the correct answer using the code given below:
(a) 1, 2 and 3 only

(b) 1,2 and 4 only

(c) 1,3 and 4 only

(d) 2, 3 and 4 only

 

Post your answers here.

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