Policy Environment Analysis in Indian Fertiliser Industry

Abstract

The objective of this paper is to analyse the impact of Government policy decisions in fertiliser industry.  Indian Government has taken two strategic decisions in this industry viz., introduction of Retention Price Scheme in 1976 and the decontrol of phosphatic and potassic fertilisers in 1992. The two tier pricing implemented in the first decision has made a positive impact on the growth of this industry and the agricultural production.  However the second decision to partially decontrol the phosphatic and potassic fertilisers and keep urea under control has led to a lopsided environment in this industry. This growing distortion in the nitrogenpous, phosphatic and potassic (NPK) usage in Indian agriculture is a threat to agricultural productivity growth. Therefore, there is a need to come out with sustainable policy which will not only improve the NPK balance in the economy but also improve the health of Indian fertiliser industry by ensuring profits to the producers. The fertilizer industry need tom be in line with rest of the economy hence a phased decontrol is thus considered is desirable so that the farmers interests can be protected.