FERTILIZER POLICY: EVOLUTION AND REFORM 47


the decontrol of phosphatic and potassic fertilizers, that ratio was 5.9:2.4:1. After decontrol, the ratio deteriorated to 9.5:3.2:1 in 1992/93 (Venugopal 2004, 105). That ratio improved to 6.9:2.6:1 in 2003/04 (DoAC 2005, 48). Improving this ratio further and correcting the bias in favor of nitrogen remains one of the key objectives of policy reform.3 Increasing the price of urea to better reflect its production cost is seen as one way of bringing about a more balanced use of nutrients. Moreover, the recommended 4:2:1 ratio of nutrients is normative and fairly arbitrary: more extensive and specific soil testing is needed to determine the nutrient requirements for specific areas. Unbalanced use of fertilizers may be one of the factors responsible for the low productivity of Indian agriculture.


According to the Indian Agricultural Statistics Research Institute (IASRI), the marginal productivity of soils in India, as measured by the overall crop response rate for fertilizer (kilograms of grain per kilograms of N, P, and K fertilizers applied), has steadily declined, from 7.5:1 in 1992/97 to 7.0:1 in 1997/99 and 6.5:1 in 1999/2000 (Planning Commission 2007, 149). More specific soil testing promises to generate more accurate prescriptions for fertilizer use and thereby correct imbalances and improve the response rate. The existing subsidy framework does not encourage the production and use of micronutrients, customized fertilizers, or more efficient forms of existing fertilizers. To increase productivity, the need to subsidize urea should be balanced with other concerns, such as the need to subsidize the use of micro- nutrients, better soil testing, and other technological improvements, and educating farmers about appropriate fertilizer products, dosage, and time and method of application.


The existing subsidy framework can also be associated with other nega- tive environmental effects of high levels of nitrogen fertilizers, such as runoff and eutrophication (Painuly and Dev 1998). The carbon footprint of increased fertilizer use must also be considered. These problems have, so far, received less attention in the academic and the policy debate India than the nutrient imbalance problem.


Reducing Regional Disparities in Fertilizer Use


Indian states vary considerably in the use of fertilizers. The intensity of fer- tilizer application in Punjab is more than double the Indian average of 94.52 kg/ha (MoF 2007b: 176). Farmers in northern India in general and in Punjab in particular use nitrogen more intensively than do farmers in southern Indian states, for example in Andhra Pradesh and Tamil Nadu. In Punjab, this leads


3 Interview with Ministry of Finance officer, New Delhi, July 26, 2007.


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