The Standing Committee of Parliament on Chemicals and Fertilizers, headed by senior Congress leader Shashi Tharoor, in its two reports tabled here on Wednesday, has posed questions on the availability of fertilizers and a subsidy policy. The panel has also questioned the high GST rate on components of fertilizers.
The reports have also called for ending the import dependency on fertilizers such as urea, diammonium phosphate (DAP), muriate of potash (MOP), nitrogen, phosphorus, and potassium (NPK). The production of these fertilizers up to November, 2022 was 281.83 lakh metric tonnes but the consumption was 401.46 LMT. “Thus, there was a deficit of 119.63 LMT for all types of fertilizers in the country, which is worrisome,” the panel said.
The panel asked the Department of Fertilizers to ascertain the reasons for shortage of fertilizers being reported in some of the States in the country and ensure availability of fertilizers in every State by taking corrective steps. The panel sought the review of a nutrient-based subsidy (NBS) that covers fertilizers like P&K fertilizers. “Urea is left out of the scheme and hence it remains under price control whereas technically there is no price control in other fertilisers,” the panel said, recommending the Centre to review the present NBS policy in order to remove the disincentives for farmers to use other fertilizers.
The committee noted that GST for fertilizers is at 5% and GST on raw materials like sulphuric acid and ammonia are at 18%. “The committee failed to understand this anomaly,” the report added and asked the Centre to lower the GST on raw materials in the interest of fertilizer manufacturing companies and farmers. It said that natural gas could be brought under the GST net as there are instances of double levying of VAT on natural gas.
The panel also recommended that the Centre introduce purchase policy reforms and enter into long term contracts for import of various types of fertilizers and raw materials so as to offset the effects of international price rise in the short/medium term. “Besides, it is imperative that the Department should be more realistic in projecting their demands of funds at Budget Estimates stage and get adequate funds to facilitate timely and optimum utilisation of funds,” it added.
