The Centre must look to transition urea to a Direct Benefit Transfer regime that reimburses small farmers for their actual fertiliser use. Explain (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The Centre’s move to usher in a ‘One Nation One Fertiliser’ regime, wherein all fertiliser manufacturers will be required to sell their products under a single ‘Bharat’ brand, appears not well thought through just as it will also be tough to implement.
· With almost every aspect of fertiliser manufacturing controlled by the government, the sector already has very few private players who have survived the vicissitudes of whimsical policy-making.
· Under the New Investment Policy 2012, urea units can be set up with the government providing subsidy support to manufacturers based on production costs plus a 12 per cent assured return on equity.
· With selling prices capped and every aspect of operations from product pricing to cost structure to geographical distribution and sales micromanaged by the government, urea manufacturing is already a highly unattractive business for any profit-oriented player to be in.
· For the Centre to reap material savings in its subsidy bill, a far simpler solution exists. It can deliver the subsidy directly to farmers, decontrol urea, and leave the pricing to market forces.
· With Direct Benefit Transfers now established as a workable way to deliver leakage-proof subsidies to targeted beneficiaries, the Centre must look to transition urea to a DBT regime that reimburses small farmers for their actual fertiliser use.
