The Commission for Agricultural Costs and Prices (CACP) has recommended the inclusion of Urea in the Nutrient-Based Subsidy (NBS) regime for the Kharif crops 2023-2024 season. This policy change is suggested to tackle the issue of imbalanced nutrient usage in agriculture, which has arisen from the exclusion of urea from the NBS scheme. The result is a disproportionate use of urea, leading to deteriorating soil health.
Understanding the Commission for Agricultural Costs and Prices
Established in 1965, the CACP is a statutory body under the Ministry of Agriculture and Farmers Welfare. It consists of a Chairman, Member Secretary, one Member (Official), and two Members (Non-official) who represent the farming community. The commission’s primary responsibility is to recommend Minimum Support Prices (MSPs) to encourage farmers to adopt modern technologies that increase productivity and overall grain production.
Why Should Urea be Included under NBS Regime?
One reason for this recommendation is due to the limited capacity to produce urea fertilizer in India because of inadequate natural gas supplies. Consequently, there has been an increase in imports of urea fertilizers, which have a higher subsidy burden per tonne compared to domestic urea. Furthermore, the lack of urea in the NBS regime has led farmers to overuse it, neglecting other essential nutrients, and causing soil health degradation.
Impact of Pricing Policies
While urea’s Maximum Retail Price (MRP) remains steady at Rs 5,360 per metric tonne (MT), the prices of other fertilizers, such as Diammonium Phosphate (DAP), have risen over time. The freedom granted to manufacturers of non-urea fertilizers to set MRPs within reasonable limits, along with fixed per-tonne subsidies based on nutrient content, has contributed to their rising prices.
Key Recommendations
Recommendations include bringing urea under the NBS regime to link subsidies to its nutrient content, introducing a cap on subsidized fertilizer bags, and using technology and identification systems to implement the proposed cap on subsidized fertilizers efficiently.
What is the Nutrient-Based Subsidy (NBS) Regime?
Under the NBS regime, fertilizers are provided to the farmers at discounted rates, based on the nutrients they contain. The purpose of this policy is to increase the consumption of these fertilizers to achieve an optimal balance of NPK fertilization, improve soil health, enhance crop yield, and reduce the burden of the fertilizer subsidy.
Challenges Related to NBS
Despite its benefits, some challenges associated with the NBS include economic and environmental costs, black marketing and diversion of subsidized urea, leakage, misuse, and regional disparities in agricultural practices and soil conditions.
Looking Ahead
For long-term sustainability, a uniform policy for all fertilizers is necessary. This approach will allow farmers to purchase any fertilizer based on crop needs, potentially replacing the NBS with a flat per-acre cash subsidy. Striking the right balance between price control, affordability, and sustainable nutrient management is crucial to the success of the NBS regime.
