00:00Let's then go straight across to Professor Ashok Gulati, Distinguished Professor, Agriculture,
00:05Hikriya, one of the country's leading agriculture economists.
00:08Appreciate you joining us, Dr. Gulati.
00:10The Union Finance Minister, Nirmala Sitaraman, earlier this week mentioned three critical
00:15Fs.
00:16Foreign exchange and fuel have been in the news.
00:18What has not been is the challenge of fertilizer.
00:21As you are seeing, the crisis now is serious, particularly the mounting fertilizer budget,
00:27which is now projected to exceed 2.5 lakh crores, could even cross 3 lakh crores if the state
00:35of hormones disruption persists.
00:37Is that the major challenge in your view?
00:40Well, thanks for having me, Rajdeep, on your show.
00:45Fertilizer crisis, two parts we need to see.
00:48One is the stock situation for the Kharif crop.
00:52That's reasonably a good news that we have ample stocks right now.
00:59But think about urea, which is our primary macronutrient.
01:06We are consuming about 40 million tons of urea.
01:12Last year, we imported about 11 million tons out of that.
01:16So, 11 million, that's about 25%, 26% of the total.
01:22The latest tender that was invited by the government for imports of 2.5 million tons,
01:29the rate that has been quoted is $1.935 delivered on West Coast.
01:38This is the minimum price.
01:40And we are selling to our farmers at about $65, less than $70.
01:47So, you can imagine that if the prices do not increase, then the subsidy, which was kept
01:54in the budget at 1.71 lakh crores for 26-27, is definitely going to blow up.
02:02As per our calculations already, $2.4, $2.5 lakh crores is likely to be the subsidy given today's condition.
02:14But very recently, we had a roundtable on this issue.
02:19And the Joint Secretary of Ministry of Fertilizers said that if things don't improve quickly,
02:26then it's going to hit even $3 lakh crores.
02:29So, from $1.71 lakh crores, which is budgeted, you are definitely going to touch about $2.4, $2.5,
02:39as on today's conditions.
02:41But if it continues the state of Hormuz blockade for another two months, three months,
02:49then it is going to be disastrous as far as subsidy is concerned.
02:53My worry is even more.
02:55And the worry is that we are almost 70% import dependent for our fertilizers.
03:03When you count not just the finished product of urea, but the urea production at home,
03:12all the gas that is coming to produce that, 85% of the gas is being imported.
03:18So, the production of urea is going to be impacted.
03:21It is going to be very high cost.
03:23So, the entire thing, I think somewhere in the middle of Kharif season or towards the end of Kharif season,
03:31we are going to have a serious crisis.
03:34That's what my reading has on today.
03:36You know, so you're warning of a serious crisis ahead of the Kharif season when it comes to urea and
03:42fertilizers.
03:43And you've been also, I've been reading your writings talking of reforms saying,
03:47give the farmers an income subsidy, don't give them a fertilizer subsidy.
03:52But as we've seen, Professor Gulati, when the government tries to introduce agricultural reforms,
03:57as they did a few years ago, there was enormous resistance.
04:00Even today, if you are to reduce the fertilizer subsidies, there could be a political backlash.
04:06Which government is willing to take that political risk?
04:12You know, you don't have free lunch in a system.
04:16When the prices internationally of the gas and urea have gone through the roof,
04:23either you say, okay, my physical deficit, let it go, explode.
04:28And then the macroeconomic environment will worsen, all your FDIs and exchange rate.
04:36All those issues, spillover effects would be there.
04:39Or you think that this crisis is an opportunity for reforming.
04:44There are different ways to reform.
04:46One, what I'm saying is from price subsidization to income support.
04:51So you have to communicate with the farmers first that we are not letting you down.
04:56We will give you that income support.
04:58We are trying to plug the leakages in the system.
05:01Because once the prices go at a natural level of markets, then all those leakages will disappear.
05:09You have created, for the last 15 years plus, the urea prices have not been increased.
05:16Is there any commodity, whether it was the MSP of rice or wheat or any other commodity,
05:22they have been continuously rising.
05:24But urea prices have remained constant.
05:27So you can't have these types.
05:29Otherwise, if you are going to subsidize this much, then you have to put quantity restrictions.
05:35That, okay, per hectare or per acre, we will give you this depending upon what crop you are growing.
05:40So link it with the land size and the crop that is being produced.
05:47You know, you are saying something interesting.
05:49You are saying that make fertilizer prices fully subject to market forces.
05:54Don't give farmers the subsidy on fertilizer prices.
05:57But create a system by which the farmer benefits in terms of income subsidies, not fertilizer subsidies.
06:04That's the major reform.
06:06Am I correct?
06:09That's right.
06:10It is switching from price subsidization to income policy and merge it with PM Kisan also.
06:17And you can still spend 2 lakh crores for subsidizing farmers.
06:22So that's not a problem.
06:24But then at least you will still save 40,000 crores which are being leaked away today.
06:31Okay, I take your point, Professor Gulati.
06:35Appreciate you joining us.
06:37You can watch that full interview, of course, on India Today's website.
06:41Thanks very much.
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