Indian Express Editorial Analysis

DAP Crisis Lessons: Understanding the Fertiliser Shortage

What is Di-ammonium Phosphate (DAP)?

• Nutrient Composition: DAP contains 46% phosphorus, essential for crop root establishment.
• Usage Timing: Applied by farmers at sowing time alongside seeds.
• Seasonal Demand: Approximately 60 lakh tonnes (lt) are needed during the rabi season (mid-October to mid-December).

Causes of the DAP Shortage

1. Inadequate Opening Stocks:
   • Current Stock Levels: Only 15-16 lt available as of October 1, much lower than the recommended 27-30 lt.
   • Planning Issues: Insufficient advance planning contributed to low stock levels.
2. Decline in Imports and Domestic Production:
   • Imports: Imports dropped significantly to 19.7 lt (April-September 2024) compared to 34.5 lt in the same period in 2023.
   • Domestic Production: Reduced production, with 21.5 lt this year vs. 23.3 lt in the previous year.
3. Unviable Imports Due to Price Controls:
   • Price Control & Subsidy: The government sets an MRP of Rs 27,000/tonne with a subsidy of Rs 21,911/tonne.
   • High Import Costs: Importing and distributing DAP costs around Rs 65,000/tonne, making it financially difficult under current controls.

Consequences of the DAP Shortage

• Availability Issues: Several states face DAP shortages, affecting local demand fulfillment.
• Farmer Protests: Long queues and protests as farmers struggle to obtain DAP during the sowing window for key crops.
• Price Hikes: Despite the government-fixed MRP (Rs 1,350 per 50-kg bag), farmers report paying Rs 250-350 more due to scarcity.

Way Forward and Conclusion

• Rethink Price Controls: Current price controls are ineffective in ensuring adequate supply.
• Encourage Competitive Supply: A competitive regime could help meet farmers’ fertiliser needs better.
• Reduce Overuse of Urea, DAP, and MOP: Excess nitrogen, phosphorus, or potassium from these fertilisers could be replaced with more efficient complexes or water-soluble alternatives.
• Subsidy Reform: Shift from product-specific subsidies to a flat per-acre payment per crop season for nutrient purchases, promoting efficient fertiliser use and reducing dependency on price controls.

 

 

Indian Express Editorial Analysis

A New Tryst with Destiny: India’s Economic Path Forward

Economic Outcomes in India and China

• China: Achieved strong wage growth but weak shareholder returns (-13% over 20 years).
• India: Delivered strong shareholder returns (1,300% in 20 years) but experienced weak wage growth.
• Challenge: India’s job issues stem from job stock since 1947 and job flow since 1991, indicating the need for manufacturing jobs and high-productivity firms.

India’s Achievements Since 1947

• Created the world’s largest democracy within a hierarchical society.
• Increased life expectancy from 31 to 68 years.
• Achieved middle-income status.

Challenges

1. Social Mobility: Social mobility in middle-income countries like India is 40% lower than in high-income nations.
2. Employed Poverty:
   • Issue of employed poverty rather than unemployment.
   • Workforce Distribution: 11% in manufacturing, 14% in construction, 45% in agriculture, and 30% in services.
   • Agriculture Dependency: Many farmers are trapped in informal self-employment, necessitating a shift towards manufacturing for economic transformation.

Factors Affecting Manufacturing Growth

1. Infrastructure: Requires significant investments.
2. Skills Development:
   • Improvement in schooling and learning outcomes.
   • NEP 2020: A 15-year roadmap for higher education that promotes employability and holistic learning.
   • Vocational training and reforms are essential to ready the workforce for manufacturing jobs.
3. Regulatory Cholesterol:
   • Excessive compliance requirements hinder small and informal firms, curbing productivity.
   • Big companies remain less affected, while smaller firms face challenges due to excessive regulations.

Leveraging Domestic Consumption and Strategic Protectionism

1. Domestic Consumption as an Asset: Growing demand in sectors like sales, customer service, and logistics.
2. Smart Policy for Manufacturing:
   • Strategic use of tariffs to support domestic manufacturing, reduce import dependence, and encourage competitive local supply chains.
   • Example: Automobile manufacturing growth through protected markets and competition has shown positive results.

Conclusion

• India’s democratic success hasn’t yet translated into mass prosperity.
• A new economic approach focused on high-productivity firms and a thriving manufacturing sector could help India fulfill its potential for prosperity.