Prime minister Narendra Modi has done well to launch a soil health card scheme, from Suratgarh in Rajasthan, which is slated to cover 14 crore farmers in the next three years. Soil health cards are an important component of agriculture reform since they help impress upon the farmer the damage done to the soil by excess use of the heavily-subsidised urea in comparison with other fertilisers. While the ideal NPK ratio is believed to be 4:2:1, agriculture economist Ramesh Chand points out the ratio is meaningless at the national level and varies according to soil conditions—Chand says there are 9 major states like Punjab and Haryana where too much urea, or N, is used. Apart from resulting in higher pollution, extra use of N reduces the health of the crop while, at the same time, does nothing to increase productivity. This is probably why prime minister Narendra Modi said using nitrogenous, phosphatic and potassic (N,P,K, respectively) in the correct ratios could save farmers up to R50,000 per year for a 3-acre plot. What the soil card does, in effect, is to link subsidies with the health of the soil. So, in an extra urea-use area, the government could simply withdraw, or sharply reduce, the amount of subsidy given per bag of urea. And vice-versa in a urea-deficient area.
While the numbers differ from one state to another, for Punjab and Haryana, the NPK levels were 19.2:5.5:1 and 20.6:6:1, respectively, in 2011
Since the introduction of the nutrient-based subsidy regime on April 1, 2010—farmers are paid a fixed subsidy per tonne, based on the nutrient in the fertiliser—the retail price of di-ammonium phosphate has increased from R9,350 to around R23,000 a tonne, and from R4,455 to R16,650 for muriate of potash while that for the subsidised urea has increased only marginally, from R4,830 to R5,360 a tonne. While hiking urea prices will theoretically cause a huge backlash—of the Centre’s fertiliser subsidy bill of R73,000 crore bill for FY15, urea subsidy accounts for around R48,000 crore—especially given its high usage, as a CACP study suggests, this may not necessarily be true. Fertiliser constitutes only 5% of the total cost of production for the farmers, so even a 50% hike in urea prices will have a marginal impact. While even a 2.5% hike in costs will upset farmers, the use of soil cards coupled with proper education of farmers will help point out, the extra use of urea is not helping at all, whether or not it is subsidised. No reduction in subsidies can take place without educating the target audience, and the soil health cards are an attempt to do precisely that.