Paswan Hints At Revamping Urea Distribution

New Delhi, May 30 | Updated: May 31 2004, 05:30am hrs
The Congress-led United Progressive Alliance (UPA) at the Centre is keen on streamlining the distribution system of urea. It is also exploring the possibilities of reviving the closed fertiliser units, most of which are located in the eastern part of the country.

The Union minister for chemicals and fertilisers, Ram Vilas Paswan, said that he would review the entire situation and see that the subsidies earmarked reach the beneficiaries. The Common Mimimum Programme (CMP) of the UPA government has stated: Subsidies should be made explicit and provided through the Budget...All subsidies will be targeted sharply at the poor and the purely needy like small and marginal farmers, farm labour and the urban poor. A detailed roadmap for accomplishing this will be unveiled in Parliament within 90 days.

At present the distribution of all chemical fertilisers are against subsidies and distribution of the major fertiliser in use, urea is covered under the Essential Commodities Act with both its price and the subsidy amount being determined by the government.

Speaking to FE, Mr Paswan said, the distribution of fertilisers over the country has not been proper. Fertiliser consumption in the eastern and north-eastern parts of the country is below the national average. Majority of small and marginal farmers are from this part of the country. If the government is rendering subsidies on fertilisers, the benefits must reach equally to all farmers spread across the country.

The plan for urea distribution is prepared twice a year in consultation with the state governments and the industry, one before the kharif season and the other before the rabi season. As per the approved plan for the season, the fertiliser companies are required to despatch the earmarked amount to dealers in different states for distribution. But the major flaw in the law is that the dealers who gets licence for operation from the concerned state government are allowed to sell 50 per cent of the fertilisers anywhere outside the earmarked area.

In this connection, Mr Pasawn said, this loophole in the law needs to be plugged at the earliest if the fertiliser subsidy is to be targeted. He also said that the supply plan for different states should be realistic taking into account the needs of the farmers and attempts should be made to reach the needy farmers even in the remotest parts of the country.

Mr Paswan said that taking advantage of the weakness in the distribution system the dealers who are licensed to supply in the eastern part of the country are selling urea to other regions of the country and earning profit.

The additional director in the Fertiliser Association of India (FAI), BC Biswas, when contacted, admitted to this fact.

He also said that there was some problem in distribution in Bihar. He said that the licenced dealers in the state after distributing urea in the past seasons have not yet got the certificate of sales from the district collectors which are necessary for reimbursement of subsidy bill. As a result, these dealers have gone slow in distribution of urea.

Mr Paswan also said that he was exploring the possibilities of reopening the closed fertiliser units in the eastern part of the country. These closed fertiliser units are of the public sectors like Hindustan Fertiliser Corporation (HFC) and the Fertiliser Corporation of India (FCI). These units are located in Haldia, Baruni, Durgapur, Sindhri, Talcher and Durgapur. He said, we will study it on a case-by-case basis and explore the possiblities of reopening these units. Revival package for each may be the same or different, taking into consideration all related factors.

Mr Paswan also did not rule out the possibility of handing over these closed units to the private sector as the CMP has stated, generally profit-making companies will not be privatised. The CMP has further given the mandate for dealing with the loss-making public sector units saying, while every effort will be made to modernise and restructure sick public sector companies and revive sick industry, chronically loss-making companies will either be sold-off, or closed, after all workers have got their legitimate dues and compensation. The ball is now in Mr Paswans court!

Mr Paswan, however, wants to use this mandate to the maximum extent for reviving these units. He said, One of the reasons for low fertiliser consumption in eastern India is due to the absence any urea mnufacturing unit in the region.

Urea is the main fertiliser in use by farmers. The consumption of other fertilisers like diamonium phosphate (DAP), muriate of potash (MoP) and single super phosphate (SSP) are correspondingly linked to consumption of urea. There are units for manufacture of DAP in Orissa, but the consumption of DAP can only increase if urea consumption goes up.

...Subsidy Bill Likely To Go Up By Rs 1,000 Cr
Ashok B Sharma
New Delhi, May 30

The government has estimated that fertiliser subsidy is likely to go up by at least Rs 1,000 crore due to hefty increases in global prices of imported ingedients used in the manufacture of phosphatic and potash fertilisers in the country.

In the previous year, the total fertiliser subsidy was Rs 11,796.55 crore, including Rs 8,139.55 crore on urea produced in the country, Rs 1 crore on imported urea and Rs 3,656 crore on sales of decontrolled fertilisers like DAP, MoP and SSPs.

India imports phosphoric acid from Morocco, Jordan and South Africa. The suppliers in these countries have formed a cartel raising the prices from $350 to $460 a tonne this year.

The potash rock is not available in India and is imported from Central America and Canada. The suppliers of potash rock, too, have formed a cartel jacking up its prices from $124 to $160 a tonne.

The Union minister of chemicals and fertilisers, Ram Vilas Paswan is busy discussing this situation with top officials of the ministry and the industry.

we will arrive at a solution soon, he said and added if situation so warrants we do not mind raising the subsidy.

He said, one thing is clear. We want to see the subsidy given passes down to the farmers for whom it is intended. At present, the subsidy amount is directly given to the industry with the intention of proper distribution of fertilisers to farmers at affordable rates. We are reviewing this existing mechanism and are likely to streamline the process further in the interests of farmers.