The decontrol of phosphatic (P) and potassic (K) fertilisers through the introduction of a nutrient-based subsidy (NBS) regime in April 2010 was considered a significant stride towards reform. Similar measures were promised for urea, the most-consumed nitrogenous (N) fertiliser. The euphoria over these changes has now waned; their intended objectives have not been met. On the contrary, the worst fears expressed by the antagonists of these policy changes — that fertiliser prices would spiral out of control — seem to have come true. The retail prices of the key phosphatic fertiliser, di-ammonium phosphate (DAP), have soared from Rs 9,000 to nearly Rs 24,000 a tonne in the past two years; those of the main potassic fertiliser, muriate of potash (MoP), from Rs 4,500 to Rs 17,000 a tonne.
Doubts have also arisen over whether subsidy on decontrolled fertiliser is reaching farmers. Thus Minister of State for Fertilisers Srikant Kumar Jena has suggested that manufacturers of DAP and MoP should be asked to furnish costs data and other relevant facts to prove that subsidy payments are being passed on. Of course, it can be argued that both DAP and MoP are almost wholly import-dependent and that their costs have therefore escalated due to the rupee’s depreciation. The government’s recent move to reduce subsidy on these fertilisers by 10 to 24 per cent is linked with this price surge. However, this doesn’t quite negate the doubling and even tripling of their farm-gate prices. Oddly, international prices of these fertilisers have been stable — if anything, they’ve softened a bit in recent months.