When the government wants pharmaceutical companies to invest in Research and Development does it subsidises lab equipment? It does not it give any higher income tax incentive on any investment made in R&D to help pharmaceutical companies directly.
This scheme for R&D investment reaches pharmaceutical companies as it has been developed with their co-operation. Now, look at how a scheme for farmers works. The government wants to increase the productivity and the yield for farmers so it gives subsidy on chemical fertilisers. The unfortunate part is that this subsidy is given to chemical fertiliser companies so that they can sell fertilisers at a lower price. Other than the farmers numerous other industries have benefited from the low price of these fertilisers. As the chemicals used in these fertilisers is an input used in several other industries.
Ironically, this has also led to over-use of chemicals and resulted in deterioration of soil health harming productivity. As a result, the farmers have to use higher quantity of subsidised chemical fertilisers just to maintain the production at the same level. The recommended chemicals Nitrogen (N): Phosphorous (P): Potassium (K) ratio is in the ratio of 4:2:1. This ratio in 2012-13 was 8.2:3.2:1, which even the industry lobbying body Fertilizers Association of India believes is harmful for the soil.
The deterioration in the NPK ratio means that the soil fertility and natural nutrients are deteriorating at a very fast pace. The NPK ratio in 2013 in Punjab was 61.7:19.2:1; in Haryana, it was 61.4:18.7:1; in Rajasthan, it was 44.9:16.5:1; and in Uttar Pradesh, it was 25.2:8.8:1. There is now little correlation between chemical fertiliser usage and production of food grains.
Even after the change in nutrient based subsidy policy the usage ratio has not changed as farmers continue to utilise urea in high quantities.
Time has come to do a rethink on the whole chemical fertiliser subsidy policy. Instead of looking at the amount of subsidy or tinkering with the distribution of the subsidy, it is time now to look at how the farmers be given the proper incentives so that not just the productivity or yield is increased but their margins also go up. Farmers' margins have been shrinking over the years as the input quantity of fertiliser is going up exponentially.
Therefore, the time has come to junk the chemical fertiliser subsidy policy in a phased manner and wean the farmer away from it. As it is India imports 58 percent of its chemical fertiliser requirements.
The Prime Minister Narendra Modi has talked several times about the need for improving the soil health and launched the soil health card scheme. But the Ministry of Chemicals and Fertilizers seems to be still struggling with a proper scheme to incentivise a better policy.
The policy has to be framed to address the productivity of farmers soil and their profits in a sustainable manner. The answers to this question may lead to better utilisation of more than Rs 70,000 crore given in the name of subsidy for farmers to chemical companies. This is the second largest subsidy given by the government and it is not serving the purpose it was created for. The reason for that are many as I have pointed out in an earlier column.
The solution is not direct cash transfer if the subsidy is linked to chemical fertilisers. The cash transfer has to be linked to using organic fertilisers, help the farmer change his cropping pattern move away from just water intensive food grains.
This may not happen immediately but it is now more important than ever. As parts of Punjab, Western Uttar Pradesh and even Haryana are turning dark zones with aquifers drying up due to use of deep bore pumps for cultivating rice.
The policy is not the responsibility of the Ministry of Chemical and Fertilizers, but the Ministry of Agriculture and Ministry of water resources has to work on it. It cannot be built by the system that has broken agricultural practices in the country. Neither can it be implemented by the same system, hence a rethink is needed on it too. Targets have to be set not for the end of 2025, which seems to be in favor these days with the mandarins. Targets have to be built in such a manner that they are measured every six months actually after each Kharif and Rabi crops.
Chemical fertiliser manufacturers can also diversify into organic manure and build business model around it if they do not want to lose revenues.
Why should something that is bad for the environment, for the farmers and is not sustainable be pushed by the government. Wasting money behind sustaining this model is not in the interest of the country.
The writer is a Delhi based policy analyst and digital strategist; he tweets @yatishrajawat
Published Date: Mar 27, 2017 05:24 pm | Updated Date: Mar 27, 2017 06:17 pm