Context: significance of Zero Budget Natural Farming and direct cash transfer of subsidies in India.

  • Governments in both developed and developing countries intervene in agriculture with a view to achieving a wide range of economic and social objectives. The reasons for government intervention are diverse and varied.
  • Some of the most cited reasons for intervention are self sufficiency, employment creation, support small-scale producers for adopting modern technologies and inputs, reduce price instability and improve the income of farm households.
  • This intervention can take a number of forms such as domestic policies like price support programmes, direct payments, and input subsidies to influence the cost and availability of farm inputs, like credit, fertilizers, seeds, irrigation water, etc.
  • Of all domestic support instruments in agriculture, input subsidies and product price support are the most common. It is, therefore, not surprising that governments in developing countries are promoting use of fertilizers through various policy instruments including subsidies.

Fertilizer subsidy in India and issues:

The Indian fertilizer industry has come a long way since its early days of post-independence era. India today is one of the largest producers and consumers of fertilizers in the world.

  • Fertilizer subsidy was 80,000crore in 2018-19, an increase of 14 per cent over 2009-10. Large part of this went to production and consumption of urea that was not needed at all.
  • Nutrient Based Subsidy or NBS was introduced in 2010 with objective to promote balanced use of fertilizers and to limit fertilizer subsidy of the government.
  • Idea was to fix subsidy as per nutrients in the fertilizer and leave the determination of price to suppliers.
  • Presently Urea is not covered under the scheme due to political compulsions. Consequently subsidized price of Urea remained stagnant even when real costs of production have risen significantly.
  • On the other hand Potassium and Phosphorous are covered under the scheme and a fixed subsidy as per content of nutrients is given to suppliers and they change Maximum Retail Price as per market signals
  • As a result, actual use of NPK is in ratio of around 8:3:1 while recommended use is 4:2:1. This additional use of urea doesn’t give any additional benefit to the farmer. Instead this can degrade soil and harm crop.
  • Apart from Urea, farmer is not even getting benefit due from NBS in case of subsidized potassium and phosphorus. Subsidy is provided to manufacturers, who in turn are responsible to pass this subsidy to farmers in form of reduced retail prices.
  • Rather, manufacturers have increased their prices forming a cartel and have usurped subsidy meant for farmers. Another issue of fertilizer subsidy is that most of this is consumed by rich farmers of Punjab, Haryana and North West Uttar Pradesh.
  • Uptake of fertilizers depends a lot on sufficient supply of water to the crop. As about 60% of total cultivated area of India is rain fed, subsidy is cornered overwhelmingly by well irrigated states.    

Significance of Zero Budget Natural Farming (ZBNF):

  • Increasing cost of seeds, fertilizers, and pesticides led to increased cost of farming. Majority of the farmers are indebted. To reduce debt and increasing the income of farmers ZBNF will be viable option
  • Chemical farming needs all inputs like high yielding variety seeds and fertilizers and pesticides along with assured irrigation. But in ZBNF no need of package method and it can be sustained from local inputs like cow dung and other farm wastage
  • Due to increased chemical intensive farming most of the soils in India are degraded and ground water was polluted. By practicing ZBNF soil will replenish with needed nutrients and fertility along zero contamination of ground water.
  • For chemical intensive farming government every year raises the agriculture subsidy. In 2019-20 budget proposes almost 80,000crore for fertilizer subsidy. By promoting ZBNF in the long run the burden on exchequer will be reduced.

Issues with ZBNF:

  • ZBNF is an untested procedure and various claims that are being made with regards to it have to be verified and checked if this technique is to be applied on a wider scale, and before its introduction.
  • ZBNF would not be workable across all soil conditions and the yields are much lower when compared to modern scientific agriculture. Recently in Karnataka and Maharashtra the yield per acre was less than normal agricultural practices.
  • ZBNF is not really zero input; it connotes that no input needs to be purchased from the market, assuming that the farmer has at least a cow, a desi one at that, and plenty of water.
  • Experts and farmers opine that even if ZBNF is adopted at a national scale, the challenges that are associated with modern agricultural farming like knowledge gap, availability of native seed banks, cold chain facilities, price support, and marketing issues would remain unresolved.

Way Forward:

  • Fertilizer subsidies were considered particularly important in inducing farmers to adopt high yielding varieties, which often depended heavily on fertilizers, and they have been successful in this regard.
  • Therefore, with increase in fertilizer use over time, the subsidy has also increased. In India, fertilizer subsidies increased rapidly during the post-reforms period and peaked in the second-half of 2000s.
  • On the issues of whether fertilizer subsidy is distributed equitably across crops, states, and farm classes, most of  findings indicate that fertilizer subsidy is concentrated in a few states, namely, Uttar Pradesh, Andhra Pradesh, Maharashtra, Madhya Pradesh, and Punjab.
  • The fertilizer subsidy, which is budgeted at Rs 80,000crore for 2019-20, be given directly to farmers on a per hectare basis and allow them to decide whether they want to do ZBNF or chemical-fertilizer based farming.
  • The fertilizer prices will then be market determined, ensuring their efficient usage, stopping their diversion to non-agri-uses as well as to neighboring countries. It will be a win-win situation from several perspectives.

Source: https://indianexpress.com/article/opinion/columns/fertiliser-subsidy-indian-farmers-narendra-modi-govt-5998093/.