Fertilisers

Agricultural production and crop yields in Punjab have nearly stagnated. Land and water, the two most critical resources on which Punjab's rural economy is built, have sharply deteriorated over time. Profit margins of the farmers have come down drastically. The paper argues that there is an urgent need to diversify the state's agrarian economy not only in the narrow sense of diversification within the crop husbandry sector, but also in its wider sense, i e, to promote allied agricultural and non-farm activities and agro-processing in rural area.

Government policies on the fertiliser sector have been uncertain and inconsistent in the past decades, resulting in a growing subsidy burden and distortion of the optimal ratio of N P K consumption, especially after partial decontrol. Several studies and commissions have presented their conclusions on the retention pricing scheme, plant capacity assessments and subsidy reduction. These include among others, total decontrol of the sector in a time-bound manner. But political compulsions are likely to determine the vigour and pace of reforms in the fertiliser sector.