New fertiliser subsidy regime shows Cong calls policy shots

Alagiri wrote two letters to Mukherjee earlier this month suggesting that decision on the new subsidy policy be postponed. On February 3,the Chemicals and Fertilisers Minister wrote to Mukherjee saying doubts existed on certain aspects of the policy. “We cannot be sure,” he said and suggested that more consultations be held with stakeholders.

Alagiri also proposed that a pilot project be undertaken with the new NBS regime to be implemented in only a few districts. He added that state governments had not been sensitised on the subject. In the same letter,though,Alagiri admitted that the fertiliser association had assured that prices will be maintained at current levels for Kharif 2010.

Mukherjee rebuffed the suggestions within a week,saying that discussions had already taken place at length and what remained next was only approval from the Cabinet. Pointing to the industry assurance on holding prices,he wrote back that affordability and availability would not be jeopardised in any manner and cautioned that continuing with present system would impact subsidy bill further.

By now desperate,Alagiri wrote a second letter on February 10,contending that there were other ways to address contentious issues. He proposed long-term contracts at reasonable rates to ensure availability of fertilisers and suggested establishing joint ventures with countries having resources. “If we cut subsidies,it will result in scarcity of fertilisers,” he said in his letter,projecting a scary picture and seeking postponement of the new regime for at least one year.

Mukherjee responded curtly,directing him to move the new policy in the Cabinet meeting on Thursday. Sources said Alagiri then tried to avoid the meeting by citing his unavailability,to which the Finance Minister retorted that he would hold the Cabinet meeting on the day that he was present.

Alagiri raised first objections on the issue on January 20 at a meeting of the Group of Ministers headed by the Finance Minister. Conveying DMK’s reservations on the subject,he said implementing the new policy could lead to increase in fertiliser prices in the short-term.

In that meeting,Alagiri found support from Agriculture Minister Sharad Pawar,who said rise in prices was undesirable when inflation was still rising. Only Rural Development Minister C P Joshi sided with them,saying it would be better to first create awareness among farmers. But the discussions then concluded with Home Minister P Chidambaram,Planning Commission vice-chairperson Montek Singh Ahluwalia and Mukherjee making it clear that the new NBS regime was inevitable.