Cabinet Decision to Extend DAP Subsidy Intends to Facilitate Corporate Profiteering – Kisan Sabha

Cabinet Decision to Extend DAP Subsidy Intends to Facilitate Corporate Profiteering

Fall in Value of Rupee Impacting Agriculture Economy

 Vijoo Krishnan
General Secretary, Kisan Sabah

Ashok Dhawale
President, Kisan Sabha

The All India Kisan Sabha (AIKS) views the cabinet decision of the NDA3 Government to extend special subsidy on di-ammonium phosphate DAP as facilitating corporate profit rather than protecting farmers interests. Under the neoliberal regime while the price controls on urea, the most important source of Nitrogen (N), were tightened to prevent a political backlash from farmers,  the prices of Phosphoric (P) and Potash (K) fertilizers were decontrolled. Under the Nutrient Based Subsidy Scheme (NBS) fertilizer companies were allowed to use profit-maximizing prices based on market conditions.

The MRP of Urea has been statutorily fixed at Rs 266.50 per 45-kg bag since November 2012. But the prices of Muriate of Potash (MoP) increased from Rs 4,455 per tonne in 2009-10 to Rs 34,644 per tonne in 2023 (August). The price of Di-ammonium Phosphate (DAP) increased from Rs 9,350 in 2009-10 to Rs 27,000 per tonne in 2023 (August). On the other hand, the fertiliser subsidy has been slashed substantially in the last three years to the tune of an accumulated sum of Rs 87,339 Cr. In the Union Budget 2022-23 (actuals) the fertiliser subsidy was Rs. 2,51,339 crore and in the Budget 2023-24 (Revised) the expenditure made was only Rs 1,88,894 crore that was less by Rs 62,445 crore. As per the 2024-25 Budget estimate the fertiliser subsidy is Rs. 1,64,000 crore means further less by Rs.24,894 crore.

Over the last three decades, domestic production has increasingly fallen short of demand for all the fertilizers and India has become increasingly import dependent, heavily reliant on import of P and K based fertilizers to meet its requirements. The share of imports in total supply of fertilizers ranges from 60% for DAP to 100% for MoP. This has made India’s agricultural production and food security vulnerable to the vagaries of international markets and geopolitical situations.

The surge in prices is accentuated because of monopoly control of a few global corporations on mineral resources and fertilizer production. About 84% of the global supply of MoP comes from only seven companies. Profiteering by these global suppliers further pushed up the international prices. Studies have shown that the profit margins of fertilizer companies went up to 36% in 2022 and reported to have been the highest since the 2007-08 global crisis.

In addition to the rise in international prices of fertilizers and raw materials, the worst ever depreciation of the Indian rupee –  present exchange rate of 85.7 against dollar – added to the upward pressure on domestic prices thus affecting the farmers. The fall of the rupee exposes the severe failure of the Modi Government in financial management.

This crisis in fertilizer has also resulted in a massive shortage in fertilizer availability. Though the government repeatedly denied there was any shortage, the official data and the experience of the farmers at the ground shows substantial shortfall in the availability of the fertilizers associated with widespread black marketing. While the government has made all efforts to facilitate corporate profits, it is hesitant to ensure income generation for the farmers by providing MSP at C2+50% with guaranteed procurement even after widespread and the consistent struggles only expose the anti-farmer class bias of the NDA3 government.