In News:

• The Ministry of Chemicals and Fertilisers has decided to implement One Nation One Fertiliser under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).
• As a result, from October, all subsidised fertilisers will be sold across the country under a single brand name — ‘Bharat’.

What’s in today’s article:

• One Nation One Fertiliser Scheme
• News Summary

One Nation One Fertiliser Scheme

• Under the scheme, all fertiliser companies, State Trading Entities and Fertiliser Marketing Entities will be required to use a single “Bharat” brand for fertilisers and logo under the Pradhanmantri Bhartiya Janurvarak Pariyojna (PMBJP).
  • PMBJP is the Centre’s fertiliser subsidy scheme.
• The single brand name for UREA, DAP, MOP and NPKS etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK respectively.
• Also, a logo indicating Fertiliser subsidy scheme namely Pradhanmantri Bhartiya Janurvarak Pariyojna will be used on said fertiliser bags.
  • Under the scheme, companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.
  • On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana (PMBJP) logo will have to be shown.
• The scheme is aimed at bringing about uniformity in fertiliser brands across the country under the single brand name of ‘Bharat’.

Rationale behind this scheme

• Government bears the burden of subsidy and it wants to send that message to farmers
  • The maximum retail price of urea is currently fixed by the government, which compensates companies for the higher cost of manufacturing or imports incurred by them.
    • The MRPs of non-urea fertilisers are, on paper, decontrolled.
    • But companies cannot avail of subsidy if they sell at MRPs higher than that informally indicated by the government.
    • In other words, there are some 26 fertilisers (inclusive of urea), on which government bears subsidy and also effectively decides the MRP.
  • The fertiliser subsidy bill of the government is huge and only second to the food subsidy in terms of expenditure.
    • It is expected to be over Rs. 2 lakh crore in 2022-23.
  • Hence, the government possibly felt that farmers should know the financial burden it incurs in providing fertilisers at a cheaper rate.
• To reduce transport subsidies
  • The government also pays manufacturers freight subsidies- or the cost of ferrying their products to the end-user.
  • The government decides where manufacturers can sell their products under the Fertiliser (Movement) Control Order, 1973.
  • However, due to the freight subsidy provided, manufacturers don’t hesitate to sell across longer distances.
  • Hence, another argument for the launch of single-brand fertilisers is to reduce transport subsidies, estimated to be over ₹6,000 crore per year.
• To curtail brand-wise demand for fertilisers in specific areas
  • Using freight subsidy, manufacturers were involved in the criss-cross movement of fertilisers for longer distances.
    • A company producing fertiliser in UP was selling it to farmers in Maharashtra and vice versa.
  • This created brand-wise demand for fertilisers in specific areas leading to shortage of fertilisers in other areas.
  • At the same time, local manufacturers also suffered.
  • Hence, it was felt that if manufacturers stop selling urea distinctively under individual brands, there would be no need for Indian Farmers Fertiliser Cooperative (IFFCO) to move fertilisers across states.
    • This will ensure uniform availability of fertilizers while reducing the transport subsidy bill.

Criticism

• Reduced role of manufacturers
  • The scheme will disincentivise fertiliser companies from undertaking marketing and brand promotion activities.
  • They will now be reduced to contract manufacturers and importers for the government.
    • Any company’s strength ultimately is its brands and farmer trust built over decades.
• Quality and efficiency might suffer
• Critics argue that completely commoditising fertilisers could impact their quality.
• It might discourage manufacturers from bringing newer and more efficient products into the market as there will be less scope for building brand identity.
• Atmanirbharta in fertilizer sector might be affected
  • The government has expressed targets to become “Atmanirbhar” or self-sufficient in fertilisers, which are currently imported in large proportions.
  • This might take a hit under the new scheme.
• Increased role of government
  • Currently, in case of any bag or batch of fertilisers not meeting the required standards, the blame is put on the company.
  • But now, that may be passed on fully to the government.

Way forward

• Experts call for Direct Benefit Transfer (DBT) to farmers and decontrolling the price of fertilisers.
  • While the government has tried DBT in fertilisers on a pilot basis, the massive subsidy targets announced by the government till 2026 don’t seem to indicate a full-fledged rollout of the DBT system soon.
• The idea should be to empower farmers by giving them a range of choices and motivates manufacturers to make better products.
• All of this in turn would help reduce the subsidy bill.