People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 12

March 13, 2012


AIKS Flays Fertiliser Subsidy Cuts


THE All India Kisan Sabha (AIKS) has condemned the union cabinet’s approval for reducing the total subsidy outgo for phosphatic and potassic fertilisers by up to 28 per cent for the financial year 2012-13. The AIKS said this move would only be used as a pretext by the fertiliser companies to jack up prices of these fertilisers.


As it is, according to the latest cabinet decision, the subsidy on diammonium phosphate (DAP) and muriate of potash (MoP) would be Rs 14350 and Rs 14440 per metric tonne respectively. Subsides for DAP and MoP fertilisers will thus be slashed by 27.4 per cent and 10 per cent respectively. Subsidy rates for nitrogen, phosphate and potash nutrients are being cut by 11.6 per cent, 32.6 per cent and 10.3 per cent respectively. Only recently, the inter-ministerial committee had decided to reduce the subsidy on DAP and MoP to Rs 15,000 a tonne. Now this further cut in subsidies will translate into increase in the MRP of these fertilisers as there is no control over the fertiliser companies. It will put tremendous burden on the peasantry and cause them acute distress. It will also have an adverse impact on agricultural productivity and incomes.


The AIKS statement, issued by its president S Ramachandran Pillai and general secretary K Varadha Rajan on March 2, 2012, also pointed out that the falls in international prices are not going to benefit the farmers in any way as the fertiliser companies are only interested in maximising their profits.


The AIKS has therefore demanded that the decision to decontrol fertiliser prices must be scrapped with immediate effect, and called for fixation of the maximum retail price (MRP) at subsidised rates to provide relief to farmers. It noted that the nutrient based subsidy regime is only to promote corporate interests and it has to be withdrawn.


Already, as a result of the nutrient based subsidy regime of “fixed subsidies” and “volatile prices” and decontrol of fertiliser prices, the fertiliser companies are raking in huge profits at the expense of the peasantry. The experience after decontrol has been that while the increases in world market prices lead to immediate hikes in prices, there is no case of any relief to the farmers in the event of a fall in international prices. The government is making a mockery of the plight of the peasantry by claiming that the cut in total subsidy outgo for phosphatic and potassic fertilisers has been done to make these fertilisers available to farmers at a price lower than the delivered cost.


The AIKS statement drew attention to the fact that decontrol of fertiliser prices has led to a scenario wherein the MRP skyrocketed.  Prices of a tonne of DAP has more than doubled from Rs 9350 in April 2010 to nearly Rs 20000. Dealers are charging as high as Rs 26000 per tonne by creating artificial scarcity in some states. Farmgate prices of MoP have similarly gone up from Rs 4455 per metric tonne to over Rs 12000 per metric tonne in the same period. This was the case even when the subsidies for DAP and MoP were higher than the proposed subsidies at Rs 19,763 a tonne and Rs 16,054 a tonne, respectively, a few months back. The absence of a binding clause on the fertiliser companies to translate such subsidies to lower MRP for farmers and punitive measures in the case of failure has only given a free hand to these companies to rake in profits at the expense of the peasantry.


The AIKS has also demanded immediate regulation of fertiliser companies and fixation of MRP of fertilisers at affordable rates. It has warned the government against going ahead with this anti-peasant move and called upon the peasantry to rise up in protest against such retrograde steps.