The Indian Farmers Fertiliser Cooperative (Iffco) has welcomed the Union Budget's proposal to accord infrastructure status to investments in fertiliser production.

“We have Rs 5,500-6,000 crore worth of investments in the pipeline for the next three years. Allowing 100 per cent investment-linked tax deduction for capital expenditure in new plants as well capacity additions in existing facilities will certainly encourage us to take these up”, Dr U.S. Awasthi, Managing Director of Iffco, told Business Line .

Iffco, which makes a fifth of the country's urea and nearly a third of its phosphatic and other complex fertilisers, now has a urea production capacity of 42.42 lakh tonnes (lt) and 43.35 lt of phosphatic/complexes.

“We are planning to invest about Rs 4,500 crore in a new 15 lt urea plant next to our existing Kalol (Gujarat) unit. Besides, Rs 600-700 crore would be spent to add 5 lt to the phosphatic-complexes plant at Paradeep (Orissa) and an equivalent amount on increasing energy savings at the existing Kalol and Phulpur-I urea facilities, which might also result in higher production”, said Dr Awasthi.

Gas linkages

All these will, of course, be subject to obtaining gas linkages for the proposed new Kalol plant and also a clear policy with regard to pricing and extension of nutrient based subsidy (NBS) to urea. “The Finance Minister has talked about extending the NBS regime to urea and I believe it will happen in 2011-12”, Dr Awasthi pointed out, while also welcoming the Budget announcement to implement the direct transfer of fertiliser subsidy to farmers by March 2012.

“So far, they were only talking in a general sense. But this Budget has laid out a clear timeline, with a task force (under the Chairman of the Unique Identification Authority of India, Mr Nandan Nilekani) working out the modalities for the proposed system and submitting its report by June for further implementation by March 2012”, he added

The Finance Minister, in his Budget speech, said that the direct cash subsidy transfer would be made to people below the poverty line. “I suppose that would basically refer to small and marginal farmer, with larger farmers getting the benefits of higher minimum support prices for their crops. But there is nothing preventing extension of subsidy to even bigger farmers,” Dr Awasthi noted.

Direct subsidy transfers

The success of direct subsidy transfers is linked to the Centre's ‘Swabhiman' and ‘Aadhar' schemes. The former aims at providing bank accounts to all rural families through business correspondents armed with electronic hand-held devices. The latter would provide UID numbers establishing the identities of beneficiaries by way of bio-markers, which the devices can recognise.

While about 20 lakh Aadhar numbers have already been issued so far, the Finance Minister said that from October 1, 10 lakh numbers would be generated on a daily basis. That, in turn, will lay the ground for implementation of the Centre's various targeted subsidy programmes.

Dr Awasthi said that the fertiliser subsidy budgeted for 2011-12, at Rs 49,998 crore, is not adequate. “Just as in earlier years, this time, too, they will probably end up providing more in the second or third supplementary demands for grants,” he added.

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