`The only way out is to improve indigenous production`

Q&A: JS Sarma

The mounting fertiliser subsidy burden and complaints of fertiliser shortage from states have been the two major issues that the UPA government is grappling with. While it has managed to defer the problem of subsidy dues by issuing bonds to fertiliser companies, the demand for additional supply of fertilisers continues. JS Sarma, secretary in the Department of Fertilisers since July 2006, who joined the Telecom Disputes Settlement and Appellate Tribunal as a member on July 28, spoke with Joe C. Mathew on the policy initiatives taken by the government to encourage production and appropriate use of fertilisers. Excerpts:

In spite of the government’s efforts, shortage of fertilisers remains a problem in several pockets. Why?

The availability of fertilisers has always been more than the sales. The complaints are not because of availability , but due to distribution problems at the district level and beyond. In 2006 and decided to introduce a credible system of monitoring fertiliser movement in the country. The Fertiliser Monitoring System (FMS)has helped us overcome this problem.

So are you saying the shortage is not that severe a problem?

There is no shortage . We know that the required quantity, as sought by state governments, reaches the district level. Maybe there are problems in some places with regard to further movement to the block level. We are going to track that movement also.

Could a shortage result from wrong projections?

The entire movement is pre-planned. We have monthwise data of fertiliser requirement of each district for each fertiliser and the supply is programmed accordingly. For instance, our August supply plan was communicated to state governments by July 15.

The department holds meetings with state governments at the beginning of both kharif and rabi seasons where they tell us their monthwise requirement. We have asked manufacturers to work out a date schedule so that we know what quantity has arrived on which date.

Have policy measures aimed at promoting balanced use of fertilisers taken off?

We are now reimbursing actual freight charges for supply of all fertilisers. In order to avoid the pressure on di-ammonium , we have incentivised (single super phosphate. We have brought coated fertilisers or fortified fertilisers under the subsidy regime. We have also reduced the prices of complex fertilisers.

The long-awaited SSP policy has been challenged in several high courts. The small scale industry complains it is against their interests. Your comments.

We are sorting it out. Our decision (to limit marketing of SSP to large units) was aimed at ensuring quality. What is the point in giving subsidy for a spurious SSP? I am not saying that a small-scale manufacturer is necessary sub-standard. But we need to have some sort of a mechanism to regulate the quality of SSP. We are paying them more subsidy now.

Are there any measures to ease the subsidy burden?

The imports of costly raw materials have increased, hence the subsidy burden has increased. The only way out is to improve indigenous production and enhance incentivising indigenous production. We have recently issued orders related to phosphatic and potassic fertilisers. We have given a policy directive for a longer period, say for five years.

We have also incentivised people to go and bargain. We said any indigenous product produced from DAP would get imported DAP price. So we are no longer concerned with what is the price of rock phosphate or phosphoric acid. We actually make them go and bargain. Earlier, we were giving them the actual prices. The result is already showing as the DAP prices have started softening. It will have an impact on the subsidy burden.