Centre holds back divestment of 8 fertiliser PSUs

The Modi government's ambitious agenda is to expand the domestic production of urea so that imports could be cut down by nearly 30% by 2024. However, that idea would still require some time for execution, hence the decision.

New Delhi, Jan 21: India, which imports most of its fertilizers thanks to lower production capacity, aims to reduce its dependence and for that it requires to have a robust investments in the sector. To increase its fertilizer production capacity, the government came up with the idea of divesting its 8 public sector fertilizer companies or fertilizer PSUs. However, the decision has now been shelved for the time being.

The Modi government's ambitious agenda is to expand the domestic production of urea so that imports could be brought down by nearly 30% by 2024. However, that idea would still require some time for execution. Apart from trust issues, there are various other issues that fertilizer producing PSUs face. Hence, it decided to hold it back for some time.

For instance, various surveys done on farmers show that they think a hundred times before deciding to buy fertiliser from a public sector undertaking (PSU) as these are prone to inefficiencies. With private investments and technology not just the production would go up, the quality would also be augmented so that farmers trust the output.

Divestment will take time

As it happens with most of the divestments in PSUs similar issues are being faced in fertilizer PSU disinvestment. Now, the reports say that the government has put off the proposed privatisation that it had decided earlier last year. The government had made its mind that it would divest 8 PSU fertiliser companies as it looks to ramp up local production.

Towards the goal, several meetings were also held and that were all attended by the top officials. Needless to say, the top officials from the Department of Public Enterprises (DPE) and Department of Investment and Public Asset Management (DIPAM) along with officials from Department of Economic Affairs (DEA) and Department of Fertilisers (DoF) met and decided on the step.

Requirement to bring private equity

The decision to divest these fertilizer PSUs was done for the right purposes and it may take time; however, it is being considered crucial for India. Moreover, since it's quite evident that these PSUs are prone to 'inefficiencies' and 'mismanagement' as most of them are run and influenced by bureaucratic and political entities, production and quality both don't meet the requirement from the farmers.

Therefore, to bring a positive change, the officers in the meeting held last year decided to divest government shares in Rashtriya Chemicals & Fertilisers (RCF) and National Fertilizers (NFL). Other PSUs like Brahmaputra Valley Fertilizer Corporation (BVFCL), FCI Aravali Gypsum and Mineral (FAGMIL), Madras Fertilizers (MFL), Fertilizer Corporation India (FCIL) and Fertilizers and Chemicals Travancore (FACT) were also in the list.