A high-level source at the Ministry of Finance (MoF) told Republica that fertilizer subsidy will be increased to Rs 3 billion in a bid to provide relief to farmers who are facing rising farm cost, which is weakening their competitive power compared to farmers in other countries.[break]
The government had allocated Rs 1.5 billion to procure 100,000 tons of subsidized fertilizer in 2009/10.
Pashupati Gautam, managing director of Agriculture Inputs Company (AIC) - the state owned distributor of agriculture inputs - said they had procure a total of 97,000 tons of fertilizers during 2009/10. “We will be able to purchase 250,000 tons of fertilizers with Rs 3 billion allocated for 2010/11,” Gautam added.
According to officials, annual demand of chemical fertilizers in the country hovers around 500,000 tons.
The Ministry of Agriculture and Cooperatives (MoAC) had demanded the government to allocate Rs 2.3 billion as fertilizer subsidy for 2010/11.
The government had reintroduced subsidy on fertilizer from 2009/10 after almost a decade. It had withdrawn subsidy on fertilizer from 1997/98, following pressure from donor agencies.
The government is also doubling the number of subsidized shallow tube wells from 7,000 to 15,000 units. The program is aimed at providing relief to farmers who are recurrently affected by insufficient and erratic rainfall during cultivation season.
The upcoming budget will also announce duty incentives and other facilities on imports of agriculture tools, besides providing concessional loan to farmers for livestock farming at an annual interest of 4 to 5 per cent through state-owned banks. The incentive is being announced in a bid to substitute import of meat products and fresh milk.
The government mooted the program after the import of livestock and meat products crossed Rs 15 million in 2009/10, recording balance of payment (BoP) deficit of as much as Rs 23 million.
Related story
Homestay not attracted by subsidy
