How Modi govt handled fertiliser crisis in the wake of Russia-Ukraine war

New Delhi: The ongoing war between Russia and Ukraine has not only reshaped geopolitical landscapes but has also sent shockwaves through global agricultural markets, particularly affecting fertiliser prices. 

India, heavily reliant on fertiliser imports, found itself at the epicentre of this crisis.

Russia, alongside Belarus, dominates the global supply of key fertilisers like potash, urea, and phosphates. 

The Russia-Ukraine conflict led to sanctions, logistical nightmares, and a drastic reduction in exports, causing fertiliser prices to skyrocket. 

This disruption was been particularly harsh for countries like India, which imports nearly 100% of its potash and a significant portion of other fertilisers.

Government's financial shield

In response, the Indian government, under Prime Minister Narendra Modi, has ramped up its financial support:

2022-23 fiscal year: An unprecedented Rs 2.25 lakh crore was allocated for fertiliser subsidies, aimed at insulating farmers from the global price surge. This massive injection of funds ensured that the cost of cultivation did not escalate for Indian farmers, maintaining stability in food production.

2023-24 revised estimates: Despite initial plans to slightly reduce the subsidy, the government revised its estimates to Rs 1.89 lakh crore. This adjustment reflects the government's commitment to continue supporting agriculture amidst ongoing global uncertainties.

Economic trade-offs

The decision to heavily subsidise fertilisers has had ripple effects across India's economic planning:

Job creation and infrastructure: Funds that could have been channeled into employment generation or infrastructure development have been redirected. While this prioritizes food security, it potentially slows down other development sectors.

Social welfare: Programs designed to uplift marginalised communities might see reduced funding, as the government diverts resources to stabilise agricultural costs, potentially affecting social welfare outcomes.

Diplomatic maneuvering

India has not solely relied on financial measures. Diplomatic efforts have been crucial:

Strengthening ties with Russia: Despite international pressures, India has maintained and even increased its imports of Russian fertilisers. This strategic relationship ensures a continuous supply, albeit at a higher cost, mitigating some supply chain disruptions.

Towards self-reliance

Recognising the vulnerability of being import-dependent, the Modi government is pushing for long-term solutions:

Boosting domestic production: Initiatives are underway to enhance domestic fertiliser production, reducing reliance on imports.

Sustainable agriculture: Promoting practices that reduce fertiliser use through better soil management and organic farming techniques.

Infrastructure investment: Plans to invest in logistics and storage to create a more resilient supply chain, reducing the impact of future global disruptions.