Subsidies and trans-border smuggling of fertilizers
This article is about large-scale smuggling of fertilizers from India to Bangladesh and the steps that can be taken by the local, state and Central Governments to stop this practise. The main reason for this trade is the high proportion of subsidy
JUST AS water finds its own level, commodities find their ‘market price’, based on inexorable law of demand and supply, irrespective of political boundaries and border guards. If fertilizers in India are subsidised to the extent of 85 per cent, the flow to Nepal and Bangladesh is inevitable, especially because of the long border and the geographical terrain.
Therefore, the big challenge for states like Bihar, Bengal, Assam and Tripura is to ensure that the supplies meant for their farmers is not diverted to the neighbours: Not only does this lead to artificial scarcity in the border regions, it also means that the Indian tax-payer is subsidising agriculture of the neighbouring country without getting any diplomatic leverage for the same! The problem is compounded by the fact that it foments a criminal nexus amongst traders, politicians, policemen and border guards, all of whom collude to sabotage the system because the gains made from these transactions are much higher than they would earn by the honest sweat of the brow!
When these transactions take place at some isolated and remote points, one can blame ‘individual greed’, but if it happens along the entire length of the border (albeit in varying proportions) there is a systemic flaw, which needs to be addressed. This edition of ‘AgriMatters’ is devoted to addressing the trans-border trade in fertilizers.
The first and foremost problem in addressing this issue is the multiplicity of agencies involved. The Agriculture Department is involved because the ‘control over movement, distribution and quality’ of fertilizer is with the designated officers of the department and usually the agriculture development officer at the Block is entrusted with this responsibility. The District Administration is involved because the provisions of the Essential Commodities Act can be invoked to check hoarding and over pricing. However, the actual task of enforcement has to be done by the Enforcement Branch of the police. The district police is generally responsible for controlling crime but trans-border crime, especially the prevention of smuggling is the special mandate of the BSF. The trade license to the dealers is issued by the local panchayat, the fertilizer license is issued by the Agriculture Department on the basis of the demand assessment and projection made by the fertilizer companies.
The Fertilizer Control Order, on the basis of which the license is issues is administered by the Agriculture Ministry but the ministry, which can control the fertilizer companies by ‘denying or delaying’ their ‘subsidy’ is the Fertilizer Ministry. In fact fertilizer companies respond more to state departments of agriculture than the Union Agriculture Ministry because states have to issue the ‘eligibility certificate’ which entitles them to subsidy.
How does one enforce discipline in such a maze? Much as one hates to admit, in several parts of the country, no one is bothered. The dealer gains as his stocks are sold in bulk, and he makes much more than his legitimate commission. The cops, border guards, panchayat and agriculture department officials are happy because they get their share for looking the ‘other way’. The fertilizer company gets the same subsidy – irrespective of whether the fertilizer is sold in India or Nepal or Bangladesh.
The legislators and political activists are often divided – because at the grassroots level, they support the demand for liberal ‘trade licenses’ for dealers, but also express their concern about informal trade at ‘public fora’. Last, but not the least, is the role of the judiciary, which insists on the letter of the law being followed to the hilt, even as the spirit is violated with impunity. Thus, ‘reasonable restraints’ imposed by the District Magistrates under Section 144, or restricting the number of dealers in the ‘eight kilometre radius’ from the border have not been upheld by the High Court, and directions have been issued to give ‘dealerships’ to all those who submit the memorandum of interest as envisaged under the Fertilizer Control Order (FCO).
However, just because the challenge is tough it does not mean that no solutions can be found. They have be found, both at the level of policy, and in taking concrete steps at the ground level. Thus, at the ground level, if it can be ensured that distribution takes place, not from the rake head (railway siding), but the authorised warehouses, the first level check will be in place. The Principal Agriculture Officer can ensure that the designated officer physically checks all the stocks before the sale is allowed in the district. The inventory position can be circulated to all the public representatives in the district so that at least everyone across the political spectrum is aware of what the fertilizer position was at the beginning of the month. The sub allotment within the district can be based on the cropping intensity and the sowing area. This can at least ensure a realistic ‘supply-demand’ matrix which can be monitored at various levels. Stockists and dealers can be directed to display the quantity, and occasional checks on quality can ensure that adulterants are not added to fertilizer. The services of the Legal Metrology Department have to be sought to ensure that the provisions of the Weights and Measures Act are properly enforced.
District Magistrates can be requested to hold a monthly meeting with the BSF, Police, Agriculture Department and the Enforcement Directorate to ensure that district level co-ordination does not become lax.
At the State level, the establishment of a special Fertilizer Monitoring Cell with a fleet of vehicles, with the general authority to lodge FIRs, if the need arises should be mandated with carrying out regular checks at the level of the distributor, stockist, dealer and sub-dealer to see the actual ‘flow’ of fertilizer. This will be in addition to the enforcement measures already taken up at the district level. This special cell will also seek a review of the orders of the High Court regarding the grant of fertilizer dealerships along the border belt, without a realistic assessment of the requirement of fertilizer based on cropping intensity. More often than not, the court has never been given the government version of the story, and many cases have been decided in default. If required, the Advocate General’s advice on the issue may be sought.
Last but not the least, the State governments have to write to the GoI, suggesting that FCO gets more teeth. As long as the government is controlling fertilizer through subsidy, it is imperative that the State governments have the power and authority to take stringent action, not only against the dealer who operates close to the border, but also the stockist, distributor and the fertilizer company itself, for such large scale movement cannot take place without complicity at higher levels.
‘AgriMatters’ will keep the readers posted on what happens next. Whatever the outcome, it will certainly be interesting!
When these transactions take place at some isolated and remote points, one can blame ‘individual greed’, but if it happens along the entire length of the border (albeit in varying proportions) there is a systemic flaw, which needs to be addressed. This edition of ‘AgriMatters’ is devoted to addressing the trans-border trade in fertilizers.
The first and foremost problem in addressing this issue is the multiplicity of agencies involved. The Agriculture Department is involved because the ‘control over movement, distribution and quality’ of fertilizer is with the designated officers of the department and usually the agriculture development officer at the Block is entrusted with this responsibility. The District Administration is involved because the provisions of the Essential Commodities Act can be invoked to check hoarding and over pricing. However, the actual task of enforcement has to be done by the Enforcement Branch of the police. The district police is generally responsible for controlling crime but trans-border crime, especially the prevention of smuggling is the special mandate of the BSF. The trade license to the dealers is issued by the local panchayat, the fertilizer license is issued by the Agriculture Department on the basis of the demand assessment and projection made by the fertilizer companies.
The Fertilizer Control Order, on the basis of which the license is issues is administered by the Agriculture Ministry but the ministry, which can control the fertilizer companies by ‘denying or delaying’ their ‘subsidy’ is the Fertilizer Ministry. In fact fertilizer companies respond more to state departments of agriculture than the Union Agriculture Ministry because states have to issue the ‘eligibility certificate’ which entitles them to subsidy.
How does one enforce discipline in such a maze? Much as one hates to admit, in several parts of the country, no one is bothered. The dealer gains as his stocks are sold in bulk, and he makes much more than his legitimate commission. The cops, border guards, panchayat and agriculture department officials are happy because they get their share for looking the ‘other way’. The fertilizer company gets the same subsidy – irrespective of whether the fertilizer is sold in India or Nepal or Bangladesh.
The legislators and political activists are often divided – because at the grassroots level, they support the demand for liberal ‘trade licenses’ for dealers, but also express their concern about informal trade at ‘public fora’. Last, but not the least, is the role of the judiciary, which insists on the letter of the law being followed to the hilt, even as the spirit is violated with impunity. Thus, ‘reasonable restraints’ imposed by the District Magistrates under Section 144, or restricting the number of dealers in the ‘eight kilometre radius’ from the border have not been upheld by the High Court, and directions have been issued to give ‘dealerships’ to all those who submit the memorandum of interest as envisaged under the Fertilizer Control Order (FCO).
However, just because the challenge is tough it does not mean that no solutions can be found. They have be found, both at the level of policy, and in taking concrete steps at the ground level. Thus, at the ground level, if it can be ensured that distribution takes place, not from the rake head (railway siding), but the authorised warehouses, the first level check will be in place. The Principal Agriculture Officer can ensure that the designated officer physically checks all the stocks before the sale is allowed in the district. The inventory position can be circulated to all the public representatives in the district so that at least everyone across the political spectrum is aware of what the fertilizer position was at the beginning of the month. The sub allotment within the district can be based on the cropping intensity and the sowing area. This can at least ensure a realistic ‘supply-demand’ matrix which can be monitored at various levels. Stockists and dealers can be directed to display the quantity, and occasional checks on quality can ensure that adulterants are not added to fertilizer. The services of the Legal Metrology Department have to be sought to ensure that the provisions of the Weights and Measures Act are properly enforced.
District Magistrates can be requested to hold a monthly meeting with the BSF, Police, Agriculture Department and the Enforcement Directorate to ensure that district level co-ordination does not become lax.
At the State level, the establishment of a special Fertilizer Monitoring Cell with a fleet of vehicles, with the general authority to lodge FIRs, if the need arises should be mandated with carrying out regular checks at the level of the distributor, stockist, dealer and sub-dealer to see the actual ‘flow’ of fertilizer. This will be in addition to the enforcement measures already taken up at the district level. This special cell will also seek a review of the orders of the High Court regarding the grant of fertilizer dealerships along the border belt, without a realistic assessment of the requirement of fertilizer based on cropping intensity. More often than not, the court has never been given the government version of the story, and many cases have been decided in default. If required, the Advocate General’s advice on the issue may be sought.
Last but not the least, the State governments have to write to the GoI, suggesting that FCO gets more teeth. As long as the government is controlling fertilizer through subsidy, it is imperative that the State governments have the power and authority to take stringent action, not only against the dealer who operates close to the border, but also the stockist, distributor and the fertilizer company itself, for such large scale movement cannot take place without complicity at higher levels.
‘AgriMatters’ will keep the readers posted on what happens next. Whatever the outcome, it will certainly be interesting!
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