01/09/2022 - Agriculture

KEY POINTS

·        Under the scheme, all fertiliser companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs) will be required to use a single “Bharat” brand for fertilisers and logo under the PMBJP.

·        The price of the most used fertiliser, urea, is controlled by the government, meaning all manufacturing companies sell at a fixed MRP, which is just 10-20 per cent of production costs.

·        The government provides 80-90 per cent of the cost of production to the manufacturers in the form of a subsidy.

·        Besides paying subsidies to companies for the cost of production, the government also pays manufacturers freight subsidies- or the cost of ferrying their products to the end-user.

·        One rationale is that if manufacturers stop selling urea distinctively under individual brands, there would be no need for Indian Farmers Fertiliser Cooperative (IFFCO) to move fertilisers across states, thus reining in the fertiliser subsidy expenditure.

·        The Chief Economic Advisor noted in the Economic Survey of 2016 that the fertiliser sector is highly regulated, which causes a major distortion in the sector.

·        Experts thus call for Direct Benefit Transfer (DBT) to farmers and decontrolling the price of fertilisers, so that the system empowers farmers by giving them a range of choices and motivates manufacturers to make better products.

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