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Reform Package of the Fertilizer Sector

Budget - Dated:- 26-2-2016 - The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the Government budgeted ₹ 73,000 crore- about 0.5 per cent of GDP- on fertilizer subsidies in 2015-16. Nearly 70 per cent of this amount was allocated to urea, the most commonly used fertilizer, making it the largest subsidy after food. Distortions in urea are the result of multiple regulations. These distortions feed upon each othe .....

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aining inefficient domestic production instead of going to the small farmer. A reform package would address each of the problems identified above- the three leakages and skewed mix of fertilizer use- with the primary aim of benefiting the small farmer. First, decimalizing urea imports- which would increase the number of importers and allow greater freedom in import decision- would allow fertilizer supply to respond flexibly and quickly to changes in demand. This would be timely as climatic fluct .....

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zer manufactures to be efficient, as they could then earn greater profits by reducing costs and improving urea quality. And this in turn would benefit farmer. Economic Survey 2015-16 states that the case for implementing direct transfers in fertilizers is to reduce leakages to the black market. The government s policy of neem-coating urea is a step in exactly this direction. Neem-coating makes it more difficult for black marketers to divert urea to industrial consumers. Technology could be furth .....

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