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Days after small savings rollback, govt now presses pause on rise in prices of key fertilisers

The decision comes days before major rice-producing states — including West Bengal, Tamil Nadu and Assam, where assembly elections are under way — kick off kharif sowing.

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New Delhi: The Modi government has directed the fertiliser industry to not increase prices of key non-urea fertilisers despite a surge in the cost of imported inputs. 

The decision comes days before major rice-producing states — including West Bengal, Tamil Nadu and Assam, where assembly elections are under way — kick off kharif sowing. Farmers in these states would have been hit particularly hard by the price increase, and the government’s directive is seen as a potential bid to avoid voter blowback.

Earlier this month, the government rolled back — within hours — a cut in the interest rates for small savings schemes, another decision that was perceived as being driven by the ongoing election season.

Over the past few days, the retail prices of major non-urea fertilisers such as diammonium phosphate (DAP), Muriate of Potash (MOP) and other complex fertilisers such as nitrogen, phosphorus and potassium (NPK) increased by up to 50 per cent. 

The Indian Farmers Fertiliser Cooperative Limited (IFFCO), which is the country’s largest fertiliser seller, increased the prices of a 50kg bag of DAP by 58 per cent to Rs 1,900 from Rs 1,200/bag. Indorama India Pvt Ltd also hiked DAP prices to Rs 1,495 per bag from Rs 1,200 per bag, with other companies increasing the rate by 46-58 per cent in light of new global contracts for inputs.

However, Minister of State for Chemicals & Fertilisers Mansukh Mandaviya tweeted Friday that the government held a high-level meeting with fertiliser industry representatives, and a decision was taken to hold off the price rise. 

The meeting, sources in the ministry said, was held Thursday.

IFFCO clarified Thursday night that the increased prices were a tentative cost and not meant for sale to farmers. 

IFFCO CEO and Managing Director U.S. Awasthi said in a statement on social media that he had “instructed our marketing team to sell only previously packed material with old rates to farmers”. “We always take decisions on the farmer’s first approach,” he added.

Speaking to ThePrint, a senior official in the ministry said an increase in the price of non-urea fertilisers such as DAP could have “multiple negative results”, including turning farmers towards cheaper urea. The official, however, noted that it was at best a stop-gap arrangement unless the government decided to boost the fertiliser subsidy. 

The prices of non-urea fertilisers are decided by the companies after factoring in a per-tonne/subsidy handed out by the government to keep the price at “reasonable levels”. Meanwhile, the price of urea is fixed by the government.

“With increasing prices of such fertilisers, farmers resort to excessive usage of subsidised urea, which leads to dip in yield by disturbing the nutritional balance,” the official said on the condition of anonymity. 

“The MRP of urea is unchanged from 2012, when it was increased by Rs 50/tonne to Rs 5,360/tonne. The MRP of a 45 kg bag of urea is Rs 242 and that of a 50 kg bag is Rs 268 whereas that of a 50 kg bag of DAP is Rs 1,900,” the official added.

According to the official, coupled with the “regular increase in fuel prices, a rise in fertiliser prices would have further stoked the sentiments of agrarian distress in the country”. 

“However, with the bullish rally in the international market of these fertiliser inputs, its prices will have to be increased sooner or later. The old stock will only hold for 2-3 months and the only way out is the government stepping in and providing increased subsidy for these fertilisers,” the official added.


Also Read: Modi govt withdraws cuts in small savings rates hours after order as Assam, Bengal vote


Elections in key rice-producing states

West Bengal, a key election state, is India’s leading rice producer, with an annual production of over 162 lakh metric tonnes (LMT), according to the Union Agriculture Ministry’s Directorate of Rice Development. Out of the state’s total area of 8.8 million hectares, rice is cultivated on 5.8 million hectares.

Two other election states — Assam and Tamil Nadu — are also among India’s top 10 rice-producing states, with an annual production of 52.21 LMT and 61.31 LMT, respectively. 

A rise in the prices of non-urea fertilisers would have also likely triggered unease in Punjab, where farmers have already been protesting against the Modi government’s new farm laws. Punjab is believed to be heavily reliant on NPK, using it in a ratio of 62:19:1, as opposed to  the countrywide norm of 4:2:1.  

In 2018, fertiliser consumption in Punjab stood at 232 kg/hectare, against a national average of 133kg/hectare, according to statistics released by the Punjab Agricultural University in 2020.

Edited by Sunanda Ranjan


Also Read: Armed with AI & drones, online mandis shake up farming, aim to cut waste to boost farm income


 

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