Bharat : One Nation One Fertiliser : Daily Current Affairs

Date: 31/08/2022

Relevance: GS-3: Issues related to direct and indirect farm subsidies

Key Phrases: One Nation One Fertiliser, Single Brand for Fertilisers and Logo, Fertiliser (Movement) Control Order, 1973, Maximum Retail Price of Urea, Nutrient Based Bubsidy Scheme

Why in News?

The Ministry of Chemicals and Fertilisers has decided to implement One Nation One Fertiliser by introducing a “Single Brand for Fertilisers and Logo” under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).
Henceforth, there will be a single brand of all fertilizer products in the country.

Key Highlights about the scheme:

The single brand name for UREA, DAP, MOP and NPK etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK etc. respectively for all Fertiliser Companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs).
A logo indicating fertiliser subsidy scheme namely Pradhanmantri Bhartiya Janurvarak Pariyojna will be used on said fertiliser bags.
The existing fertiliser subsidy is now covered under the PMBJP scheme.
There will be only one brand, Bharat, which will generate trust among the farmers.
The companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.
On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be shown.

What is the rationale behind this move?

Subsidy cost borne by the government:
- The maximum retail price of urea is currently fixed by the government, which compensates companies for the higher cost of manufacturing or imports incurred by them.
- The MRPs of non-urea fertilisers are, on paper, decontrolled. But companies cannot avail of subsidy if they sell at MRPs higher than that informally indicated by the government.
- There are some 26 fertilisers (inclusive of urea), on which government bears subsidy and also effectively decides the MRPs.
- Urea subsidy, which is borne by the Centre as it decides the selling price at which farmers should get irrespective of cost of production, is as high as 89 per cent while farmers pay only 11 percent of its actual costs when they buy a bag of 45 kg at ₹242.
Control over sale of fertlisers:
- The government also decides where they can sell the fertilisers apart from subsidising and deciding at what price companies can sell.
- This is done through the Fertiliser (Movement) Control Order, 1973.
- Under this, the department of fertilisers draws an agreed monthly supply plan on all subsidised fertilisers in consultation with manufacturers and importers.
- This supply plan is issued before the 25th of each month for the following month, with the department also regularly monitoring movement to ensure fertiliser availability as per requirement, including remote areas.

What can be the drawbacks of the scheme?

It will disincentivise fertiliser companies from undertaking marketing and brand promotion activities.
They will now be reduced to contract manufacturers and importers for the government. Any company’s strength ultimately is its brands and farmer trust built over decades.
Currently, in case of any bag or batch of fertilisers not meeting the required standards, the blame is put on the company. But now, that may be passed on fully to the government.

Do You Know?

The difference between the delivered cost of fertilizers at farm gate and net market realization by the urea units is given as subsidy to the urea manufacturer / importer by the Government of India.
Government of India decontrolled Phosphatic and Potassic (P&K) fertilizers with effect from 25th August 1992.
Consequent upon the decontrol, the prices of the Phosphatic & Potassic fertilizers registered a sharp increase in the market, which exercised an adverse impact on the demand and consumption of the same.
It led to an imbalance in the usage of the nutrients of N, P & K (Nitrogen, Phosphate and Potash) and the productivity of the soil.
Thus, nutrient based subsidy scheme was introduced.

Nutrient Based Subsidy Scheme:

Under the scheme, the subsidy on Phosphatic and Potassic (P&K) fertilizers is announced by the Government on an annual basis for each nutrient on a per kg basis.
A fixed amount of subsidy decided on an annual basis, is provided on each grade of subsidized Phosphatic and Potassic (P&K) fertilizers depending upon its nutrient content.
This subsidy is given by the Government of India to the P&K fertilizer companies which are therefore able to provide P&K fertilizers to the farmers at a subsidized MRP, which is lower than it would have been.

Source: The Hindu BL

Mains Question:

Q. The government has decided to implement One Nation One Fertiliser scheme by introducing a “Single Brand for Fertilisers and Logo” under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP). Critically examine. (250 words).