Q&A: Ajay Bhattacharya, Fertiliser Secretary

'It is still early days for a judgement on nutrient-based subsidy'

The fertiliser sector has been needing reforms for years. A ray of hope emerged in the form of the Nutrient-Based Subsidy (NBS) scheme of 2010. New fertiliser secretary Ajay Bhattacharya tells Shaikh Zoaib Saleem it is too early to judge how it has worked. While optimistic over new investments, he agrees the subsidy will be high. Edited excerpts:

Decontrol of urea and high subsidy are the sector’s most-talked issues.
This is something not decided at my level. The high level of subsidy at the moment is a cause of concern. One factors is international prices. Fortunately, international urea prices have softened to some extent. On decontrol of urea pricing, this has to be decided at the cabinet level.

 

Demand for urea is coming in from different states.
We have enough stock of urea. Also, during peak seasons, there is local supply-demand mismatch. These are logistics issues. It imposes a duty upon us to ensure the logistics are taken care. We are continuously interacting with the railways to maximise the movement from ports and factories and the movement is more this year compared to the previous year.

The Nutrient-Based Subsidy scheme came with much enthusiasm, but it does not seem to be working, as the subsidy is going up.
It is wrong to pass a general wide-ranging judgment after just over a year of operation. More, that year of operation has been abnormal in a sense that the price movements internationally have been wide-ranging. We have to take lessons from our experience and see what can be done.

You are talking of high subsidies, which would have been much higher but for NBS. It is still early days for NBS and I hope things settle down properly in the near future.

After the supplementary grant from the parliament for the fertiliser subsidy, current spending would cross Rs 65,000 crore. There are estimates that this, again, would prove insufficient.
Whatever the requirements, we will ask the finance ministry for more grants. I agree we will need some more help from them.

Will short supply of potash and phosphorous create problems?
P and K were in short supply in the kharif season. Yet, it did not have any adverse impact. But we should not draw conclusions from this. For the rabi season, we have enough P and K. Use of fertiliser is biased in favour of urea, also due to skewed prices.

There have been reports of non-agricultural (industrial) use of urea and also that it is being smuggled into Nepal and Bangladesh.
The vast arbitrage opportunities between subsidised and unsubsidised urea would tend to drive people towards this behaviour. Urea prices are not subsidised in Bangladesh and Nepal.

On industrial use, the Fertiliser Control Order has a provision for industries to get separate licences. Some may want to do this.

We can only work towards simplifying the process to get the permission for industrial use, though I do not think it is very complicated.