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Fact Checking Government claims on Fertilizer Production & Price

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The BJP government has published an infographic on the 48-months portal that makes five claims about the access and availability of fertilizers. This article is a fact check of the claims

The BJP government has published an infographic on the 48-months portal that makes five claims about the access and availability of fertilizers. This article is a fact check of the claims.

Has 100% neem coating happened? What have the benefits been?
The first claim is that ‘100% neem coating resulted in improvement in soil health, reduction in pest and disease attack.

The annual report (2017-18) of the Department of Fertilizers states that ‘the Government in June 2008 had notified the policy for encouraging production and availability of fortified and coated fertilizers in the country wherein the indigenous manufacturers/producers of the subsidized fertilizers were allowed to produce fortified/coated subsidized fertilizers up to a maximum of 20% of their total production of respective subsidized fertilizers. This ceiling of production of Neem Coated Urea(NCU) was increased from the limit of 20% to a maximum of 35% of their total production in January 2011. Subsequently, in January 2015, Department of Fertilizers removed the cap/restriction to produce Neem Coated Urea and the indigenous producers of urea could produce up to maximum of their total production of subsidized urea. Subsequently in May 2015, it was made mandatory for all the indigenous producers of urea to produce 75% of their total production of subsidized urea as Neem Coated Urea and made effective from 1st April, 2015. Finally, based on the CCEA approval, Department of Fertilizers issued notification whereby it has been made mandatory for all the domestic producers of urea to produce 100% as Neem Coated Urea with an extra MRP of 5% (of Rs. 5360/- per MT) to be charged by the fertilizer manufacturing entities from farmers. Entire quantity of indigenously produced urea and imported urea is being neem coated from 1st September, 2015 and 1st December, 2015 respectively’.

A response in Lok Sabha in January 2018 states that ‘ As per a notification in May 2015, Department of Fertilizers has made it mandatory for all the indigenous producers of urea to produce 100% of their total production of subsidized urea as Neem Coated Urea (NCU). Entire quantity of indigenously produced urea and imported urea is being neem coated’.

The annual report (2017-18) of the Department of Fertilizers states also states that ‘the Neem Coated Urea has received high acceptance among the farmers considering its benefits on soil fertility/conservation, higher yield pest control’. This still does not provide any conclusive proof of whether the neem coating has had any impact on soil health, pests and disease attacks.

Claim: 100% neem coating resulted in improvement in soil health, reduction in pest and disease attack.

Fact: It is true that through a notification in May 2015, Department of Fertilizers has made it mandatory for all the indigenous producers of urea to produce 100% of their total production of subsidized urea as Neem Coated Urea (NCU). However, the impacts of this are not yet published by any government report/source. Moreover, successive governments  (starting with UPA 1) have progressively increased the limit of neem coating on subsidized urea. Hence, the 100% mandatory part is TRUE while the impacts remain UNVERIFIED.

Has there been an increase in nitrogen use efficiency and crop yield?
The second claim is that ‘there has been an increased nitrogen use efficiency and increased crop yield due to neem coated urea’.

The annual report  (2017-18) of the Department of Fertilizers states that ‘due to its slow release of Nitrogen, the Nitrogen Use Efficiency (NUE) of Neem Coated Urea increases resulting in reduced consumption of NCU as compared to Normal urea’.

As is the case of the previous claim, there is no other data available in the public domain to verify the increase in crop yield or nitrogen use efficiency.

Claim: There has been an increased nitrogen use efficiency and increased crop yield due to neem coated urea

Fact: The Nitrogen Use Efficiency (NUE) of Neem Coated Urea increases resulting in reduced consumption of NCU. However, data regarding increased crop yield because of this is not available. Hence, the claim remains UNVERIFIED.

Is there a special banking arrangement to clear fertilizer subsidy dues?
The third claim is that ‘special banking arrangement of Rs. 10,000 crores to clear fertilizer subsidy dues’.

To clear outstanding subsidy claims of urea & fertilizer manufacturers, governments have followed varied methods. The UPA-1 government issued fertilizer bonds (similar to oil bonds) to clear outstanding subsidy. The current government is following the method of special banking arrangement where in short term loans are raised from PSU banks at similar interest rate as bonds. The current government has resorted to this special banking arrangement in almost every year to clear the outstanding subsidy claims. It made these arrangements for Rs. 14,500 crores in 2014-15,  for Rs. 7,000 crores in 2015-16, for Rs. 10,000 crore in 2017-18, for Rs. 7,000 crores in March 2018 for the second half of 2017-18.

The claim in the infographic refers to the Rs. 10,000 crores in 2017-18.

Claim: Special banking arrangement of Rs. 10,000 crores to clear fertilizer subsidy dues.

Fact: To clear outstanding subsidy claims of urea & fertilizer manufacturers, governments have followed varied methods. The UPA-1 government issued fertilizer bonds (similar to oil bonds) to clear outstanding subsidy. The current government has resorted to special banking arrangement in almost every year to clear the outstanding subsidy claims. Hence, the claim is TRUE. However, such arrangements to clear outstanding subsidy claims are not new.

Has the new Urea Policy led to significant increase in Urea production?
The fourth claim is that ‘significant increase in urea production with new urea policy’.

An answer in Lok Sabha in August 2015 stated that ‘the New Urea Policy-2015 (NUP-2015) has been notified by the Department of Fertilizers in May 2015. NUP-2015, aims to achieve twin objectives of maximizing indigenous urea production and promoting energy efficiency in urea production while rationalizing subsidy burden on the government. It is expected to prepare the domestic urea sector to become globally competitive in terms of energy efficiency over a period of three years. It will drive urea units to select better technology and different measure to reduce energy consumption. The policy would ensure timely supply of urea to the farmers at the same Maximum retail Price with lesser financial burden on the exchequer’.

Another response in Lok Sabha in March 2017 states that ‘NUP-2015 has led to additional production of approximately 20 LMT from the existing plants against the year 2014-15 and the total production of urea during the year 2015-16 was approximately 245 LMT i.e. the highest ever urea production in the country’.

If one looks at the annual production of Urea since 2001-02, there was only 3.7% increase in the production of Urea during UPA-1, 14% increase during UPA-2 and 5.8% during the first four years of the current government. While the 244.75 LMT production in 2015-16 is the highest ever, even this represents only a 7.7% increase in production during the current government. If one were to take the highest ever production as the criteria, the production in 2012-13 and 2013-14 were the highest ever till that year.

Claim: Significant increase in urea production with new Urea policy

Fact: If one looks at the annual production of Urea since 2001-02, there was only 3.7% increase in the production of Urea during UPA-1, 14% increase during UPA-2 and 5.8% during the first four years of the current government. While the 244.75 LMT production in 2015-16 is the highest ever, even this represents only a 7.7% increase in production during the current government. Hence, the claim is MISLEADING.

 Has there been a decrease in MRP of fertilizers?
The fifth claim is that ‘there has been a reduction in the MRP of DAP & MOP and complex fertilizers’.

It is true that the prices of DAP, MOP and other complex fertilizers reduced in the year 2016 as prices had come down in the international market and this reduction was purely because of market dynamics. The government or its policies had very little to do with this reduction. In fact, the prices of DAP & MOP have again increased by more than 25% and 50% respectively between December 2017 & October 2018. The increase was again because of market dynamics.

Claim: There has been a reduction in the MRP of DAP, MOP and complex fertilizers.

Fact: It is true that the prices of DAP, MOP and other complex fertilizers reduced in the year 2016 as prices had come down in the international market and this reduction was purely because of market dynamics. The government or its policies had very little to do with this reduction. In fact, the prices of DAP & MOP have again increased by more than 25% and 50% respectively between December 2017 & October 2018. The increase was again because of market dynamics. Hence the claim is FALSE.

This story is part of a larger series on the 4-years of the Modi government. This series has been made possible with the flash grant of the International Fact Checking Network (IFCN). Read the rest of the stories in this series here

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