White paper on chemicals industry moots alternatives to fertilizer subsidy
Primus Partners Pvt Ltd, a management advisory services firm, on Thursday released a white paper on the chemicals industry with a particular focus on fertilizer subsidies, stressing the need to ease the transition to alternative practices.
“…economic studies should be conducted in each crop group to assess the impact on agricultural inputs, investments, cash flows, farmers’ efforts and production quality. The identification of necessary support and cost-effective initiatives for farmers to make the switch is essential,” the company said.
In addition, the development of value chains for the proposed solutions, accompanied by special schemes, will enhance the economic viability of the main participants, said the white paper.
Support is unpredictable
The white paper, in particular, highlights the importance of fertilizer subsidies, their inherent volatility, and the urgent need for effective policies to address the challenges they pose.
Fertilizer subsidies make up a large portion with an annual appropriation of around INR 1.75 crore, which is about 20 per cent of all schemes in the 2023-24 budget. This allocation is divided into two major components: ₹1.31 lakh crores for urea subsidies and ₹44,000 crores for nutrient-based subsidies.
However, Primus said, fertilizer subsidies are often seen as unpredictable, with the revised estimate for 2022-23 more than doubling the budgeted amount. This volatility stems primarily from fluctuations in international gas and urea prices. The report said that fertilizer subsidies have an important role in India’s overall food production and agricultural input management for farmers.
You need to resolve the deadlock
Several support-related issues have since been identified. The white paper said there was an impasse between conflicting and noble goals, which needed to be resolved
The company has highlighted the reasons for the impasse preventing the improvement of the fertilizer subsidy policy and mechanism. “We believe that viable alternatives must be found for farmers to move away from harmful overuse of urea. By improving support policies and mechanisms, adopting technological developments and tailored farming techniques, we can open up new avenues for growth and sustainability in the fertilizer industry.
Reducing urea use by promoting viable alternatives is of paramount importance. “Technological developments in agriculture, such as urea nanoparticles, precision agriculture, use of drones, GIS applications and improved farming technologies, show promising potential in achieving this goal,” the white paper said.
She said developing a tailored package of technologies and practices for crop clusters, such as potato clustering in the Firuzabad district, would help prioritize areas with the highest potential to reduce urea use.