Explained: What is the PM-PRANAM scheme that aims to reduce use of chemical fertlisers?

By: Anshul Vipat

One of the primary objectives of the scheme will be minimising Union government's subsidy burden on chemical fertilizers

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.

What is PM-PRANAM scheme?

This scheme will not have any separate budget and will be financed through the “savings of existing fertilisersubsidy” under schemes run by the Department of Fertilizers. 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.

What was the need for this scheme?

One of the primary reason for launching this scheme is huge increase in consumption of chemical fertilisers in the past couple of years. This has put a tremendous strain on the subsidy budget of the government which is already delaying with an economic slump due to pandemic and global disruption of supply chain due to Russia-Ukraine war.

According to the latest statistics by the Ministry of Chemicals and Fertilizers, the last five years have seen an increase of 21 percent in the requirement for four fertilisers, namely, Urea, DAP (Di- ammonium Phosphate), MOP (Muriate of potash), and the NPK (Nitrogen, Phosphorus and Potassium). The consumption has increased from 528.86 lakh metric tonnes in 2017-18 to 640.27 lakh metric tonnes (LMT) in 2021-22.

Urea, the most used chemical fertiliser in the country, recorded an increase of 19.64 per cent — from 298 LMT in 2017-18 to 356.53 in 2021-22 — in the last five years. DAP recorded a maximum increase of 25.44 percent - from 98.77 LMT in 2017-18 to 123.9 LMT in 2021-22. During the same period, the requirement of NPK also increased from 98.19 LMT to 122.74 LMT.

The government provides subsidies to cushion farmers from high prices. Global prices of fertilisers hit a record high in the recent months that rose due to the spike in global prices of fertilisers.