NEW DELHI (Commodity Online): India’s CAG (Comptroller and Auditor General) report on performance audit of fertilizer subsidy has observed that the production of fertilizers has increased only marginally. While the assessed requirement for fertilisers went up by more than 70%, the production registered only a jump of 11%, the report noted.
The report also said that consumption of fertilisers has been robust and whatever quantity produced has been readily consumed.
Further, the changes in the subsidy regime, including NPS (New Pricing Scheme) stages I to III have failed to incentivize increase in domestic production of fertilizers and capacity addition.
The New Pricing Scheme (NPS) was introduced to encourage efficiency parameters, use of most efficient feedstock and state-of-art technology, ensure viable rate of return within the above parameters, introduce greater transparency/simplification and induce urea units to undertake cost-cutting measures on their own to be competitive.
Therefore, the aim of change in subsidy policy from RPS (Retention Price Scheme) to NPS was not capacity addition and to incentivize urea production, the report said.
The report has recommended striking a fine balance between improving yields through chemical fertilisers and maintaining soil health. It has also advised government to substantially improve on quality control infrastructure in fertilisers, including setting up of new laboratories.
Meanwhile, to increase domestic production of urea and capacity of urea units, the Government has announced a separate policy/scheme for new investment in urea sector and off take of urea from joint venture abroad on 4th September, 2008 which is aimed at revamp, expansion, revival of existing urea units and setting up of Greenfield/Brownfield projects, according to a press release.
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