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GROWTH OF CHEMICAL FERTILISER CONSUMPTIONIN

INDIA: SOME ISSUES
Mr. Santosh Suryawanshi
Research Student,
(Ph.D. in Economics)
Solapur University, Solapur
ABSTRACT
This have examine the the trend of chemical fertilizers consumption in India,
during the period of 1981-82 to 2011-2012. This paper have based on secondary
data, this data have collected from handbook of Indian economy and state of
Indian agriculture.
Plants nutrients supply from the chemical fertilizer is the key to increasing
agriculture production by improving the land productivity. However, the demand-
supply gap of fertilizers in India has increased in recent times, thereby leading to
increased dependency on imports .India imports which were about 2 million
tonnes in early parts of 2000 increased to 10.2 million tonnes of fertilizers in
2008-09.
However, the demand supply gap of fertilizers in India has increased in
recent times due to dependency on imports. Consumption of chemical fertilizers
have led to import of its. The increase in rate of subsidy of chemical fertilizers
combined with increase in consumption of fertilizers has led to a substantial
increase in requirement of subsidy.

INTRODUCTION
Government of India has always permitted high priority for agricultural development.
Agriculture is the backbone of the Indian economy. As of 2014, India had a large and diverse
agricultural sector, accounting, on an average, for about 13.9 percent of GDP and 10 percent
of export earnings. India has grown to become top among the three global producers of a
broad range of crops, including wheat, rice, pulses, cotton, peanuts, fruits, and vegetables.
The significance of agriculture in India arises from the fact that development in
agriculture is an essential condition for the development of the national economy.
(Swaminathan, 2002).
Indian agriculture is facing challenging task in providing food security to the ever-
increasing population. Food grain production could not keep pace with increase in
population. The area under farming in India is declining due to population pressure and urban
development. The present cultivable land area is not likely to increase substantially in the
near future. It is essential to increase productivity of individual crops and intensify cropping
systems to meet future food needs (Nampoothiri and Balasimha, 1999). Cultivable land area
is not likely to increase substantially in the near future. It is essential to increase productivity
of individual crops and intensify cropping systems to meet future food needs (Nampoothiri
and Balasimha, 1999).The most challenging problem today is that the growth rate of food
grain production dropped to 1.03 percent per annum, which was lower than the population
growth rate (1.65 percent per annum) during the period 2001-11.
Chemical fertilizers have played an important role in making the country self‐reliant
in food grain production. The role of Government of India has been significant, as the
Government has been consistently pursuing policies conducive to increased availability and
consumption of fertilizers at affordable prices in the country. It is for this reason that the
annual consumption of fertilizers, in nutrient terms (N, P & K ), has increased from 0.07
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million MT in 1951‐52 to more than 28 million MT in 2010‐11 and per hectare consumption,
has increased from less than 1 Kg in 1951‐52 to the level of 135 Kg now.(pc12th plan)
Agriculture productivity is dependent upon various factors such as soil properties,
climate conditions, irrigation facilities, seed quality and variety, cropping pattern, techniques
of farming, prevention from pests etc, but more importantly usage of optimum primary,
secondary and micro nutrients. Thus, the role of Government becomes more significant in
making available all types of nutrient at affordable prices to farmers at appropriate time.In
this context this paper have examine the trend of chemical fertilizers consumption in
India
Trend of fertilizers Consumption (1981-82 to 2011-12)
India is the second largest consumer of fertilizers in the world after China, consuming
about 26.5 million tonnes (Vijay Paul Sharma &Hrima Thaker-2011). It accounted for 15.3
per cent of the world's N consumption, 19 per cent of phosphatic (P) and 14.4 per cent of
potassic (K) nutrients in 2008 (GOI, 2010). Chemical fertilizers have been an important
component of Indian agriculture. However, there have been wide variations in the use of
fertilizers across states. Over the last 30 year, the overall production of food grains in India
has increased. This increase was due to the application of new input technology. In the new
package of inputs, the role of chemical fertilizer assumes greater importance. The source of
chemical consumption in India are indigence and import. While observing the growth of
fertilizer use in India as well as in Tamil Nadu MH.AP UP, MP GJ, a significant growth
could be observed. The fertilizer consumption in India have presented in Appendix (1)
The demand for fertilizers is derived demand. It depends on the price of fertilizers, of
other complementary inputs and the level of availability irrigation and credit. The fertiliser
use by famers in India has notable increased during the last 30 year. This has been show the
table 1, fertiliser consumption was 60.64 (MLT) in 1981-82 which increased to 127.28
(MLT) and 277.9(MLT) in 1991-92 and 2011-2012 respectively.
The annual growth rate of consumption of fertilizer reached maximum growth of 22.0
percent during 1983-84. It came to the lowest level of a negative percentage of 1.5 during
1991-92. In the year, 2000-2001 it reached -7.6 percent.
The 2 percentage moving annual growth rate of consumption of fertilizer in India has
shown a smoothly fluctuating trend. The rise in the fertilizer consumption was due to
improvement of irrigation and extension of new technology etc.
Fig 1 Year wise consumption, production and import of fertilizers (1981-82 to 2011-12)

Trend of fertilizers of Production

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The production of fertiliser consumption increased from 40.93(LMT) in 1981-82 to

98.63(LMT), 147.04(LMT) and 163.6(LMT) in 1991-92, 2000-01 and 2011-2012
respectively.
As of now, the country has achieved near self-sufficiency in production capacity of
urea with the result that India could substantially manage its requirement of nitrogenous
fertilizers through the indigenous industry. Similarly, adequate indigenous capacity has been
developed in respect of phosphatic fertilizers to meet domestic requirements. However, the
raw materials and intermediates for the same are largely imported. As for potash (K) since
there are no viable sources/ reserves in the country, its entire requirement have met through
imports.(AR 2010-2011) The installed capacity as on 31.03.2009 has reached a level of
120.61 lakh MT of nitrogen and 56.59 lakh MT of phosphatic nutrient, making India the 3rd
largest fertilizer producer in the world.( Minister for Chemicals & Fertilizers-2010-2011)
Demand Supply Gap
There is a large gap between the consumption and production of chemical fertilisers
in India. This gap are fulfil through the import of fertiliser from abroad. In 1981-82 the total
consumption of fertilizers was 60.64(lmt) as against indigence production of 40.93 (lmt) a
gap of 20.41(lmt). This gap widened to 27.69(lmt) in 1991-92 and to 130.02(lmt) in 2011-
12.during the 2000-201 to 2004-05 this gap decease small. But after 2005-06 this gap
increases to 52.53(lmt)
Fertilizers being a critical input in the context of food security of 85 % of small and
marginal farmers in rural India. It would be in the overall interest of the country to achieve
self-sufficient in fertilizers.
Import of Fertilizers
The year wise quantity and value of urea imported on Government Account
during the last three years and current year (up to February 2013) are as below:-

Quantity of urea (Lakh MT)

Year Value (Million US $)
From Oman Through STE Total
2009-10 20.62 31.48 52.10 1212.65
2010-11 20.64 45.46 66.10 1832.50
2011-12 20.69 57.65 78.34 3222.48
2012-13* 16.53 62.11 78.64 2905.51
Sources: www.pib.gove.in
Fertilizers other than Urea are imported under Open
General licenses (OGL). Companies import these fertilizers as per their
commercial judgment. Government do not maintain the value of these imports
since 2010-11. However, Government is paying subsidy on P&K fertilizers
under Nutrient Based Subsidy Scheme. The year-wise details of quantity of P&K
fertilizers imported during the last three years and current year (up to Feb, 2013)
is as under:-
Year DAP TSP NPK MOP # MAP
2009-10 58.89 0.87 0.00 41.62 1.93
2010-11 74.11 0.98 9.81 45.00 1.88
2011-12 69.05 1.60 36.73 26.93 4.94
2012-13 * 57.79 0.00 4.05 18.14 1.52
Sources: www.pib.gove.in* Up to Feb, 2013# for direct agriculture use

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The countries from where the fertilizers have been imported during the
last three years. This are Australia, Bahrain, Belarus, China, Canada, Chile, CIS,
Egypt, Estonia, Germany, Greece, Indonesia, Iran, Israel, Jordan, Korea, Kuwait,
Latvia, Lithuania, Malaysia, Mexico, Morocco, Oman, Philippines, Qatar,
Romania, Russia, S. Arabia, S. Africa, Singapore, Spain, Turkey, Tunisia, UAE,
USA UK, Tallinn, Ukraine, Ventspils and Vietnam.
Subsidy
Fertilizer subsidy that is prominent input subsidy denotes the difference between the
price paid to the producers of fertiliser by the government and prices received by selling
fertiliser to cultivators. Evidently, this subsidy have meant to ensure cheaper delivery of
fertiliser input to the farmers. This subsidy have given to both domestic producers as well as
the imported stock of the fertilisers.
Although control on fertiliser prices was, introduce in 1943, until the early 1970s
there was no burden on the central budget because of fertiliser subsidy. The situation changed
radically after 1973-74 following the first oil price shock [Desai, 1993]. The introduction of
the Fertiliser Retention Price Scheme 1977 further contributed to the sharp rise in budgetary
subsidy to fertiliser sector [Desai 1993, Gulati and Narayanan 2003].
The increase in rate of subsidy on fertilizers combined with increase in consumption
of fertilizers has led to a substantial increase in requirement of subsidy. In meanness of
increase in cost of fertilizers, the Government has completely kept the farmers protected from
this increase in cost and have increased the subsidy allocations to meet the consumption
needs of the farmer at subsidized level of prices. The subsidy on fertilizers has increased
sharply over the last few years. The details of central fertilizer subsidy over the last 22 years
are showing in figure 2, the linear line show the upward trend of central subsidies during the
1990-91 to 2011-12. Subsidy on fertilizers increased from Rs 4389 Crore in 1990-91 to as
much Rs 13.244 Crore in 1999-2000. It went up to Rs73791 Crore in 2011-12.
Growth rate of Fertiliser subsidy has showing the fig 3 more fluctuation due to
government policy about the fiscal target of each annual budget.

Fig-2 Total Central Subsidy(1989-90 to 2011-12) Rs in Crore

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Fig 3 Growth Rate of Subsidy (1990-91 to 2011-2012)

The steady increase in fertilizer subsidies over the years has largely been the result of
increasing production / consumption and increases in the costs of inputs of indigenous
fertilizers and prices of imported fertilizers from time to time. The cost of various inputs /
utilities, such as coal, gas, naphtha, rock phosphate, sulphur, ammonia, phosphoric acid,
electricity, etc., as also the cost of transportation, went up significantly during the eighties.
The gas-based fertilizer units commissioned during this period also involved higher capital
investment per tonne of installed capacity, necessitating constant upward revision in the
retention prices. (AR-2010-2011)
CONCLUSION
From the above analysis, it can be concluded that on a fertilizer consumption in India
had experienced a positive growth since1981-82. Consumption of chemical fertilizers have
led to import of its. The increase in rate of subsidy of chemical fertilizers combined with
increase in consumption of fertilizers has led to a substantial increase in requirement of
subsidy.
REFERENCES
1 Desai, G M (1993): ‘Fertiliser Policies: A Perspective ON Price AND Subsidy Issues’ IN
VidyaSagar (ED), Fertiliser Pricing Issues Related To Subsidies, Classic Publishing
House, Jaipur.
2 Desai, Gunvant. M (1997), Fertilizer policy reforms and agricultural growth in India,
Agricultural development paradigm for the ninth plan under new economic environment,
Oxford and IBH publishing House, New Delhi
3 Gulati, Ashok AND Sudha Narayanan (2003): The Subsidy Syndrome IN Indian
Agriculture, Oxford University Press, New Delhi.
4 AR (2010-2011) - government of India ministry of chemicals & fertilizers department of
fertilizers
5 Nampoothiri.K. V. K and Balasimha. D (1999), "Area and Cocoa – Viable Alternative",
The Hindu - Survey of Indian Agriculture, pp. 97 - 99.
6 Vijay Paul Sharma HrimaThaker(2011) Demand for Fertiliser in India: Determinants and
Outlook for 2020, W.P. No. 2011-04-01, Indian Institute Of Management Ahmedabad-
380 015 India
7 GOI (2010), “Agricultural Statistics at a Glance 2010 and earlier issues”, Directorate of
Economics & Statistics, Department of Agriculture & Cooperation, Ministry of
Agriculture, Govt. of India, New Delhi.
8 Debertin,D.(1986) Agricultural Production Economics, New York: McMillan Publishing
Company
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9 Annual Report (2010-2011) Government of India Ministry of Chemicals & Fertilizers

Department of Fertilizers
10 Report Of The Working Group On Fertilizer Industry For The Twelfth Plan (2012‐13
To 2016‐17), Government of India , Ministry of Chemicals & Fertilizers ,Department of
Fertilizers,2012
11 Swaminathan. M. S (2002), "Agrarian prosperity - In our quest for quality produce", The
Hindu survey of Indian Agriculture, pp. 9-13.
12 www.planningcommission.gov.in
13 www.pib.gov.in
Appendix 1
Year wise consumption, production and import of fertilizers 1981-82 (In LMT)
to 2011-12
Year Consumption Growth rate Production Growth rate Import Growth rate
1981-82 60.64 - 40.93 - 20.41 -
1982-83 63.88 5.3 44.04 7.6 11.32 -44.5
1983-84 77.92 22.0 45.33 2.9 13.55 19.7
1984-85 82.11 5.4 51.81 14.3 36.24 167.5
1985-86 84.74 3.2 57.56 11.1 33.99 -6.2
1986-87 86.45 2.0 70.7 22.8 23.1 -32.0
1987-88 87.84 1.6 71.31 0.9 9.84 -57.4
1988-89 110.4 25.7 89.64 25.7 16.08 63.4
1989-90 115.86 4.9 85.43 -4.7 31.14 93.7
1990-91 125.46 8.3 90.45 5.9 27.58 -11.4
1991-92 127.28 1.5 98.63 9.0 27.69 0.4
1992-93 121.55 -4.5 97.36 -1.3 29.08 5.0
1993-94 123.66 1.7 90.47 -7.1 31.67 8.9
1994-95 135.63 9.7 104.38 15.4 29.65 -6.4
1995-96 138.77 2.3 113.35 8.6 39.55 33.4
1996-97 143.08 3.1 111.55 -1.6 20.26 -48.8
1997-98 161.88 13.1 130.62 17.1 31.74 56.7
1998-99 167.98 3.8 163.21 25.0 31.45 -0.9
1999-2000 180.69 7.6 142.89 -12.5 40.75 29.6
2000-01 167.02 -7.6 147.04 2.9 20.91 -48.7
2001-02 173.59 3.9 146.28 -0.5 23.99 14.7
2002-03 160.94 -7.3 144.74 -1.1 16.74 -30.2
2003-04 167.98 4.4 142.66 -1.4 20.18 20.5
2004-05 183.99 9.5 154.05 8.0 27.5 36.3
2005-06 203.4 10.5 155.75 1.1 52.53 91.0
2006-07 216.51 6.4 160.95 3.3 60.8 15.7
2007-08 225.7 4.2 147.07 -8.6 75.83 24.7
2008-09 249.09 10.4 143.34 -2.5 101.51 33.9
2009-10 264.86 6.3 162.21 13.2 91.47 -9.9
2010-11 281.22 6.2 163.78 1.0 123.63 35.2
2011-12 277.9 -1.2 163.6 -0.1 130.02 5.2

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