CAG drills holes in govt's fertiliser policy

Drilling holes in Government's fertiliser policy, top auditor CAG today said while subsidy costs have galloped, production has not increased in step with demand even as systematic flaws exist in assessing total fertiliser requirement.

Comptroller and Auditor General said that despite the Rs 270,648 crore spending on fertiliser subsidy by the government during 2003-10, annual production of fertilisers increased only marginally from 248 million tonnes in 2003-04 to 298 MT in 2008-09.

Government's fertiliser subsidy reached its peak in FY'09 at Rs 96,603 crore, but came down to Rs 61,636 crore in FY'10. 

"Changes in the subsidy regime have failed to incentivise significant increase in domestic production of fertiliser," it added.

The fertiliser department also drew flak from the apex auditor for its failure to assess the need, which is generally not done on the basis of relevant factors.

"The process for detailed assessment of fertiliser requirements was flawed, with the general practice (as observed through field audit) being merely projection of an increase of five to 10% over the previous season's
year's requirement," it said.

"This projections did not have inputs from the district and lower levels, and were generally not based on relevant factors like the proportion of irrigated area, soil health, types of crops grown, etc," it added.

CAG also said there were significant deficiencies in planning of fertiliser supplies, with several instances of both over-supply and under-supply at the district and lower levels, with consequential excesses/shortages of the required fertilisers at the time when the farmers needed the same.

The top auditor also said the consumption of fertilisers by "mixing units" in different states represents a major flaw in the "subsidy chain" since these units consume subsidised fertilisers, but sell mixtures at higher rates.

"We also found significant deficiencies in quality control over subsidised fertilisers in terms of adequate/poor infrastructure, lack of adequate skilled manpower and huge shortfalls in testing for fertiliser samples.