Policy | VOL. 13, ISSUE 80, SEPTEMBER-OCTOBER 2013

Fertiliser Pricing and Subsidy Policy in India

Fertiliser was brought under Fertiliser Control Order (FCO) in 1957 to regulate its sale, price and quality. Various committees have been formed over the years to fulfill the objective of ensuring adequate quantity of fertilisers at fair prices to the farmers. Retention Pricing Scheme (RPS) implemented from 1977 led to a phenomenal increase in domestic production and consumption of fertilisers. But the subsidy bill kept on increasing significantly due to the rise in cost without corresponding rise in retail price. The fertiliser sector remained under government control for a long period and the cost plus approach with stringent regulations and procedures did not encourage any investment in the sector since the beginning of the 2000 decade. The fertiliser industry had hardly any scope to promote innovative products for balanced fertiliser usage. This sector needs concerted reforms. Yes, some reforms have been implemented but only partially. As a reform measure, nutrient based subsidy (NBS) on phosphorus and potassium (P and K) fertilisers was implemented from April 2010, but urea was left out. Urea price being artificially low, led to an imbalance in price ratio and consequently nitrogen, phosphorus and potassium (NPK) use ratio. NBS has, however fulfilled many other objectives, including addressing fiscal issues and adequate availability of fertiliser. The objective of NBS will be fully realised when urea will be brought under the NBS policy which will lead towards the ultimate deregulation of the fertiliser sector.

Policy | VOL. 12, ISSUE 71, March-April 2012

Climate Change and Indian Agriculture

Over 60 percent of India’s population depend on the agricultural sector which constitutes about 14.3 per cent of India’s gross domestic product, 2010-11, as per the Central Statistics Office, New Delhi. Despite technological interventions, about two thirds of India’s agricultural area remain rainfed and vulnerable to present day climate variability. The implications of climate change is yet not very clear, although scholars agree that global climate change will lead to greater unpredictability of weather conditions at local levels.