Industry wants direct payment of fertiliser subsidy to farmers

The fertiliser industry is under tremendous stress due to subsidy arrears

In a pre-Budget meeting with the finance minister, the fertiliser industry today pitched for direct transfer of urea subsidy to farmers and clearance of its arrears, which are pegged at Rs 50,000 crore by the end of the current fiscal.

"We have conveyed to the finance minister that the industry is under tremendous stress due to subsidy arrears. So, the government must allocate an additional Rs 15,000 crore for the next three years towards fertiliser subsidy, pegging the total subsidy at Rs 90,000 crore per year," Fertiliser Association of India DG Satish Chander said.

He was speaking to reporters after the pre-Budget meeting with Finance Minister Arun Jaitley.

Backing direct transfer of fertiliser subsidy to farmers, the industry expressed its willingness to work with the government on this initiative.

"We have told the government that we will capture all data required for direct transfer of subsidy. In fact, we are even ready to synchronise this entire data with the Aadhar card," Iffco MD U S Awasthi said.

Awasthi added that excessive use of urea due its lower retail price is impacting soil health and subsequently farmers, and argued for curbs.

The industry also made a case for decanalisation of urea to allow fertiliser companies to directly import urea as against the current practice where only three canalising agencies import the crop nutrient.

This is "the opportune time" for such a policy change since cost of production of Indian urea is about the same as price of imported urea.

Urea is a controlled commodity and is being sold at Rs 5,360 per tonne, with the difference between cost of production and selling price being taken care of as subsidy to manufacturers.

Subsidy on urea constitutes almost 70% of the total production cost.

India's annual demand for urea is about 30 million tonnes, while domestic production remains stagnant at 22 million tonnes. The rest is met through imports.