Par Panel recommends direct subsidy for farmers

New Delhi, Aug 13: The Parliamentary Standing Committee on Chemicals and Fertilisers has recommended the government to pay the subsidies directly to the farmers, encourage Joint Ventures in those countries which have gas and raw material in abundance and cost of production is low and ensure availability of fertilisers in the country.

As the fertilisers supplies to the farmers at affordable prices is the very basis of the country's 'food security', the panel has also suggested enhancing of the existing combined production of capacity of 26 functional companies in cooperative and private sectors, presently estimated at 20 million tonnes.

The Department of Fertilisers (DoF) has also devised a strategy to increase production by six million tonnes anticipating that existing average consumption of 96 kg per hectare is likely to touch 125 kg a hecatre in next two years particularly with the government taking steps to double the credit-flow to rural areas within a couple of years.

The Panel's 13th report placed in Parliament last week, has asked the government to rope in private sector to revive the five sick units of public sector Fertilisers Corporation of India(FCI) and three units of Hindustan Fertilisers Corporation, another public sector enterprise.

The panel has also suggested supply of gas/LNG at affordable rates to the fertilisers units along with conversion of present 10 units with naptha feedstock and four with fuel oil feed stock to this cheaper option. However, the government supply of gas to gas-based 12 units is around 23 million standard cubic metres of gas per day, about five million cubic meters less than their requirement.

On the other hand, fertiliser subsidy bill this year is likely to cross Rs 25,000 crore mark against the budgetary provision for Rs 17,250 crore during the current fiscal.

Citing Dr Y K Alagh Committee's recommendation, the Parliamentary Panel suggested the DoF to undertake the disbursal of subsidy direct to the farmers, taking note of the criticism that its payment to the industry has thwarted its competitiveness and rather sustained the obsolete technologies. Also some units resorted to gold-plating and other manipulative practice for the misuse of the subsidy.

IFFCO, which shares one-fourth of total production in the country has also opposed its disbursement of subsidy through the fertiliser manufacturers and suggested that the payment be made directly to the farmers. Also, IFFCO said it was ready to tie up with banks for introducing smart cards, entitling the farmers to draw their admissible amount of subsidies.

However, the DoF, favouring 30 year old policy of routing subsidy through the industry, has opposed the Standing Committee's suggestion saying it is unviable and impractical to pay subsidy directly to the farmers keeping in view 80 per cent small operational holdings of the country.

IFFCO, however, suggests that the poor and marginal farmers should be categorised on the lines of the scheme of providing subsidised foodgrains to the people below poverty line (BPL).

The Panel has suggested that on experiment level the payment of subsidy directly to the farmers be taken up in the Stage three of the New Pricing Scheme (NPS) which commenced on April 1 this year. The NPS had replaced the earlier Retention Price Scheme (RPS) which began in 1977.

UNI