Standing Committee Report Summary The Standing Committee on Chemicals and Fertilizers (Chair: Ms. K. Kanimozhi) submitted its report on the subject ‘System of Fertilizer Subsidy’ on March 17, 2020. The central government provides subsidy to fertilizer manufacturers and importers so that farmers can buy them at affordable prices. Key observations and recommendations of the Committee include:
Change in the subsidy policy: The Committee noted that fertilizer subsidy resulted in a tremendous growth of agricultural productivity, which was necessary for food security of the huge population of the country. However, it has also lead to negative effects such as over-use of fertilizers, their imbalanced use, and the resultant soil degradation. The Committee observed that the government is studying the existing subsidy regime and possible mechanisms which can improve the policy further. In this context, NITI Aayog has circulated its draft report to various stakeholders.
The Committee noted that any drastic change in the existing fertilizer subsidy policy would have a huge bearing on the food security of the country. It recommended that: (i) any such drastic change must be effected only after an in-depth study and wider consultations with all stakeholders (including the concerned central and state government departments, fertilizer industry, and farmers and their associations), (ii) no hasty decision should be taken, (iii) interests of small and marginal farmers should be firmly kept in mind, and (iv) best international practices should be carefully studied. It also recommended that education and awareness of farmers about the balanced use of fertilizers should be an integral part of the policy.
Direct subsidy to farmers: The Committee observed that many fertilizer manufacturing plants are operating with very old technology and systems, and not at their highest efficiency. The government bears the cost of their inefficiency in the form of higher subsidy. The Committee recommended that the companies should be set free to manufacture, supply, and sell fertilizers as per their own system. A farmer should have the choice of buying from various brands of fertilizers, while getting the subsidy directly in his bank account. Such a system will push manufacturers to produce and sell fertilizers in the most cost-effective manner, and push the inefficient ones out. It also recommended that the government should set out a clear and firm roadmap to switch to a system where farmers directly get the subsidy and the manufacturing and importing of fertilizers is set free to the market forces.
Delay in paying subsidy dues: The Committee noted that due to the non-payment of subsidy bills received from companies, there is a huge carryover of subsidy liabilities every year. At the end of 2017-18, 2,688 subsidy bills worth Rs 19,363 crore were pending for settlement. At the end of 2018-19, 9,223 subsidy bills worth Rs 30,244 crore were pending. The Committee noted that scarcity of funds due to an inadequate budget allocation is the major reason for the delay in settlement. The Committee recommended that the Department of Fertilizers should place before the Ministry of Finance the exact requirement of funds for providing the subsidy, and impress upon the need to make an adequate budget allocation for this purpose.
The Committee noted that the government allows the fertilizer manufacturing companies to take loans from banks, against their unpaid subsidy bills, to avert their financial difficulties. The government bears the cost of interest payable on these loans. The Committee recommended that to avoid unnecessary expenditure on payment of interest on these loans, a one-time additional budget allocation may be sought from the Ministry of Finance to clear all the pending dues.
The Committee noted that very often, the amount held up due to delay in payment of subsidy is fairly high, and in some cases, the delay is unusually long. As per policy guidelines, the subsidy claims submitted by fertilizer companies are required to be settled within seven working days. The Committee recommended that the Department of Fertilizers should develop a system by which a certain proportion of the amount of claim (such as 75%) is paid automatically within this period, without any lengthy scrutiny. The remaining amount should also be paid off in a fixed period of time subject to the submission of all documentation.
Expenditure on subsidy: The Committee observed that over the years, the government’s expenditure on fertilizer subsidy has been increasing. It noted that while it is necessary to keep providing the subsidy, it is also the government’s responsibility to contain this expenditure by adopting innovative ways without increasing the prices.
The Committee recommended that the government should take all possible steps to reduce its expenditure on subsidy by: (i) modernising fertilizer manufacturing plants, (ii) adopting best practices of manufacturing and strict energy norms, and (iii) building a strong research and development base for continuously upgrading the manufacturing technology, so as to reduce the manufacturing cost.
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Where else has NPPA setup PMRUs? Kerala, Odisha, Gujarat, Rajasthan, Punjab, Haryana, Nagaland, Tripura, Uttar Pradesh, Andhra Pradesh and Mizoram.
What is a Price Monitoring & Resource Unit (PMRU)? It is a registered society and shall function under the direct control and supervision of State Drug Controller of respective states. The unit shall be funded by NPPA for its recurring and non-recurring expenses.
Functions: Help NPPA and State Drug Controller in ensuring availability and accessibility of medicines at affordable prices.
Organise seminars, training programs and other information, education and communication (IEC) activities in the areas of availability and affordability of medicines for all.
Collect samples of medicines, collect and analyse data and make reports with respect to availability and over-pricing of medicines for taking action under the provisions of Drug Price Control Order (DPCO).
The order has been defined under J&K Civil Services (Decentralisation and Recruitment) Act.
What is domicile? In law, domicile is the status or attribution of being a lawful permanent resident in a particular jurisdiction.
As per the Changes, who is now deemed to have domicile? Anyone “who has resided for a period of fifteen years in the UT of J&K”. Or has studied for a period of seven years and appeared in class 10th/12th examination in an educational institution located in the UT of J&K. Or those registered as migrants and their children.
Or the children of those central government officials, All India service officials, Officials of Public sector undertaking, autonomous body of central government, public sector banks, officials of statuary bodies officials of central universities and recognized research institutes of central government who have served in J&K for a period of ten years.
Or children of residents of J&K who reside outside the Union Territory in connection with employment or business or for other professional or vocational reasons, but whose parents fulfil any of the conditions provided in the latest gazette notification will also be entitled to domicile status.
What else the order says? The Order says that the domiciles will be eligible for the purposes of appointment to any post carrying a pay scale of not more than Level 4. The Level 4 post comprises positions such as gardeners, barbers, office peons and watermen, and the highest rank in the category is that of a junior assistant.
Who can issue domicile certificates? The orders also empowers tehsildars to issue domicile certificates. The government has been empowered to notify any other officer as the competent authority to issue the certificate.
Implications: The order now formally allows people from outside J&K to apply for jobs in the UT. While Level IV jobs have been reserved for people with domicile status – as per their definition in the order – other non-gazetted and gazetted jobs have been opened for people from across the country, including people domiciled in J&K.
Background: Last year, the Parliament had given its nod to the legislation for bifurcating the state, a decision that seeks to redraw the map and future of a region at the centre of a protracted militancy movement. Earlier, Section 35A associated with the abrogated Article 370 had given the legislative assembly of the state the power to define a Jammu and Kashmir resident.
The RBI had put in place the framework on counter-cyclical capital buffer (CCyB) on February 5, 2015, wherein it was advised that the CCyB would be activated as and when the circumstances warranted.
What Is a Countercyclical Capital Buffer (CCyB) in Banking? The countercyclical capital buffer is intended to protect the banking sector against losses that could be caused by cyclical systemic risks increasing in the economy.
Countercyclical capital buffers require banks to hold capital at times when credit is growing rapidly so that the buffer can be reduced if the financial cycle turns down or the economic and financial environment becomes substantially worse.
Banks can use the capital buffers they have built up during the growth phase of the financial cycle to cover losses that may arise during periods of stress and to continue supplying credit to the real economy.
Background: The rule was first introduced in Basel III as an extension of another buffer (called the capital conservation buffer). Basel III is a voluntary set of measures agreed upon by central banks all around the world. These measures were drafted by the Bank of International Settlements’ Basel Committee on Banking Supervision in response to the financial crisis of 2007-09, in order to strengthen regulation of banks and fight risks within the financial system.
On January 13, the Supreme Court had said that anti-smog guns should be mandatory in projects that require environmental clearance from the State or Centre, and have a built-up area of over 20,000 square metres. As per this, 47 large projects in Delhi had to have these guns installed.
What is it? Anti-smog gun is a device that sprays nebulised water droplets into the atmosphere to reduce air pollution.
Connected to a water tank and mounted on a vehicle, the device could be taken across the city to spray water to settle dust and other suspended particles.
It can spray water up to a height of 50 metres and the results were positive as the spray acts like rain and settles dust particles and also PM 2.5.
Why we need such measures? Delhi has been grappling with hazardous levels of pollution since late October, with the air quality dipping to “severe” category a few times. Air pollution and the resulting smog is an outcome of three inputs – local emission of pollutants, emission transport from other states and regions, and meteorological factors like wind speed and temperature.
Need of the hour: Fragmented policies and toothless environment bodies won’t help. The centre and states will have to work jointly and quickly. Human lungs don’t understand nuances of federalism and partisan politics.
Context: US recently deployed Patriot air defence missiles to Iraq. Patriot (MIM-104) is a long-range, all-altitude, all-weather air defence system to counter tactical ballistic missiles, cruise missiles and advanced aircraft.
The missile is equipped with a track-via-missile (TVM) guidance system. The missile has a range of 70km and a maximum altitude greater than 24km. The minimum flight time is less than nine seconds and the maximum is three and a half minutes.
The National Cooperative Development Corporation (NCDC) is a statutory Corporation set up under an Act of Indian Parliament on 13 March 1963.
The objectives of NCDC are planning and promoting programmes for production, processing, marketing, storage, export and import of agricultural produce etc.
The Ministry of Civil Aviation has launched “Lifeline Udan” flights for domestic and overseas movement of essential cargo. The objective is to ensure unhindered supply of medical products across the country.