By: Anshul Vipat
The central government has been focusing on minimizing the import of fertilisers and increasing the domestic production of fertilisers
Its been more than a year since the repeal of three farm laws passed by the Narendra Modi government last year. The Farm Laws Repeal Bill, 2021 was introduced in Lok Sabha on November 29, 2021 by the Minister of Agriculture and Farmers Welfare, Mr. Narendra Singh Tomar. The bill was passed on the same day in both the houses of the parliament. The bill repealed the ‘Farmers Produce Trade and Commerce (Promotion and Facilitation) Act’, ‘The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act’, and ‘The Essential Commodities (Amendment) Act.’
The nation witnessed massive protests over the implementation of three farms laws. The protesting farmers argued that the laws would put an end to the Minimum Support Price (MSP) for major crops. There had been an apprehension among the farmers that allowing outside-APMC trade of farm produces would lead to lesser buying by the government agencies in the approved mandis. Farmers in Punjab and Haryana observed and celebrated the ‘Fateh Diwas’ or the ‘victory day’ to mark one year of the announcement of the repeal of the three controversial central farm laws.
As the farmers hit the streets with slogans and placards demanding the repeal of three farm laws, some farmer unions and farmers also protested against the inadequate supply of fertilisers. Considering the demand of farmers and highlighting the importance of the fertilisers of agriculture, India Tracker takes a look at the domestic production of fertilisers in India.
Fertilisers are the additional products used in agriculture to enhance the productivity of crops. They are generally used for increasing the crop yield. Though the overuse of fertilisers is harmful for crops, they have a rapid effect on crops helping the farmers in increasing the produce. Fertilisers make plants more resistant to pests. Fertilisers improve the water holding capacity of the plants and increase root depth. Also, the phosphorous in the fertilisers plays a very important role. It helps in faster development of roots and formation of seeds in plants.
The chart below takes a look at the domestic production of fertilisers in India.
The Indian fertiliser market expanded by 22.6 percent during the course of the last five years, from 2016 to 2021. However, the country's output of fertilisers grew by a meagre 3.78 percent, increasing its dependence on imports, which surged by 48.22 percent in FY 2020–21 from FY 2016–17. With a share of 57 percent of all major fertilisers, urea is the most commonly used fertiliser in India (Urea, Di-ammonium Phosphate (DAP), Muriate of Potash (MOP) & Nitrogen, Phosphorous and Potassium (NPK).
The central government has been focusing on minimizing the import of fertilisers and increasing the domestic production of fertilisers. Five large-scale capacity fertiliser production plants (Ramagundam, 3 HURL Plants Gorakhpur, Barauni & Sindri and Matix) are planned by the government which will guarantee to decrease imports by 6.35 million tons. DAP is the major consumed fertilizer in India after Urea and NPK. According to reports, the sales of DAP fertilizers is increasing in India year over year and touched a level of 10.5 million tons in FY 2020-21, with the growth of around 19.3 percent in last 5 years. The production of DAP hit 3.8 million tons, with a 13.6 percent decline in growth over the previous five years, and imports touched 5.8 million tons, with an increase of 31.8 percent over those same five years. Raw material price, forex fluctuations, agro-climatic risks and retail price differential of P&K fertilizers are some of the factors responsible for low production of DAP in the country.
In a bid to reduce the usage of chemical fertilisers by incentivising states, the Narendra Modi government is planning to introduce a new scheme – PM PRANAM, which stands for PM Promotion of Alternate Nutrients for Agriculture Management Yojana. Through this scheme, the government will incentivise the states that use lesser amounts of chemical fertilisers in a particular year.
One of the primary objectives of the scheme will be minimising Union government's subsidy burden on chemical fertilisers. The subsidy burden on the center is estimated to increase by 39 percent from Rs 1.62 lakh crore last year to Rs. 2.25 lakh crore in 2022-2023.
Through PM-PRANAM, center will pass on 50 percent of subsidy savings as a grant to the state that saves the money. Out of this, the state governments are supposed to use 70 percent of the grant to create assets that would lead to technological adoption in alternate fertilisers and alternate fertiliser production units at district levels, blocks and villages.
The remaining 30 percent grant money can be used to reward and encourage farmers, panchayats, farmer producer organisations, and self-help groups involved in fertiliser reduction and awareness generation. The calculation of reducing chemical fertilisers will be compared to the average consumption of urea during the last three years.