India’s finance ministry has conveyed its inability to overhaul the existing fertilizer subsidy regime because it says it is under political pressure to retain the status quo.
According to Ashok Gulati, director, Asia, International Food Policy Research Institute (IFPRI), a Washington, DC-based independent policy think tank, who was part of a group of agricultural experts that recently met with finance minister P. Chidambaram, “the finance minister said he had received representation from several members of Parliament pleading against a transfer to a direct subsidy regime.”
India has been considering a move to a system, where farmers are paid a subsidy for using fertilizers as against the current system where the government fixes the sale price of certain fertilizers and pays manufacturers the subsidy.
A spokesperson for the finance ministry said he was unable to either confirm or deny this. The total fertilizer subsidy in the Budget could touch Rs 45,000-50,000 crore, Gulati said, as global prices of fertilizer had gone up owing to rising oil prices. He and other experts, who attended the meeting, had asked the government to work out better ways to implement the fertilizer subsidy, preferably a direct transfer to farmers owning less than 2 hectares of land through smart card or coupons.
The government has so far disbursed Rs37,451 crore as fertilizer subsidy for the year 2007-08 as against a budget allocation of Rs22,451 crore. “Today we are paying out huge amounts in subsidy without a single unit of increase in productivity. The present subsidy system is damaging the soil and harming the farmer as well,” said a senior executive at a fertilizer firm who did not wish to be identified.
Udit Misra contributed to this story.