Consensus continues to elude the Centre on the politically sensitive reform of the urea sector, where it has accumulated an unpaid subsidy bill of Rs. 40,000 crore.

Prime Minister Narendra Modi presided over a meeting of senior Ministers and officials last Tuesday, which discussed if the subsidy could be provided directly to farmers through the direct benefit transfer scheme instead of the current policy of giving it to the producers.

The de-canalisation or freeing up of imports and other ways in which urea prices could be de-controlled were also discussed at the meeting. However, the meeting ended without a decision on the way forward on urea reforms. Urea is the only fertilizer yet to be de-controlled.

“As far as subsidies go, not much can be expected from this government, which the Opposition has already labelled anti-farmer,” a source, who attended the meeting, told The Hindu.

A decision on the option of direct benefit transfer could not be taken at the meeting as there was no agreement on what criteria ought to be used for identifying the eligible farmers

Eligibility issue stalls DBT route to urea reform

“The criteria of landownership would exclude majority of farmers and it could also result in the emergence of a black market for urea as not all farms….orchards for instance…require the fertiliser,” a source at the meeting said.

At present, the subsidy is paid to urea producers and importers, not farmers. The Fertiliser Ministry determines separately, for every single manufacturing plant, the difference between the market price and cost of production for urea for the purpose of calculating the subsidy.

“There is an urgency to clean up the high amount of discretion in the Fertiliser Ministry in determining the urea subsidy and also address the worsening problem of overuse of urea by Indian farmers,” said another source who attended the meeting.

Fertiliser Minister Ananth Kumar, Agriculture Minister Radha Mohan Singh, Niti Aayog Vice- Chairman Arvind Panagariya, Chief Economic Adviser Arvind Subramanian and Finance Secretary Rajiv Mehrishi were among those at the meeting.

Futile attempts

The UPA Cabinet headed by former Prime Minister Manmohan Singh had on several occasions unsuccessfully taken up the proposal of shifting urea to the Nutrient Based Subsidy regime in use at present for other fertilisers.

Source: TH