Finance minister Pranab Mukherjee gave a small glimpse of what could be the first big step towards farm reform: a shift towards need-based fertilisers. Agricultural experts have hailed the step.
To spare farmers high fertiliser prices, the government limits retail prices of fertilisers. In other words, producers sell fertilisers at below-market price and recover the rest of the cost from the government. This fertiliser subsidy currently stands at Rs 49,980.25 crore.
At easy prices, farmers tend to overuse crop nutrients.
Mukherjee said the shift towards “nutrient-based subsidy” would lead to “unshackling of the fertiliser manufacturing sector” and attract “fresh investments”.
“Nutrient-based” subsidy would mean a farmer would be entitled to subsidised crop nutrients according to the needs of the soil. This would stop overuse, which has bled the government and degraded soil quality. The new model could, however, be a political hot potato. Any move to rationalise fertiliser subsidy could trigger political opposition.
Non-Congress states could be up in arms, farm economist YK Alagh said. “If implemented in a time bound manner, it will boost investments,” said Sekhar Natarajan, India head of farm tech major Monsanto.