Friday, Dec 08, 2023

Govt Cracks Down On Urea Diversion To Industries; Aims To Plug Rs 6,000 Crore Subsidy Leakage

Govt Cracks Down On Urea Diversion To Industries; Aims To Plug Rs 6,000 Crore Subsidy Leakage

In the last two-and-a-half months, the government has identified leakages worth Rs 100 crore through various covert operations


The Centre has launched a nationwide crackdown to curb diversion of about 10 lakh tonnes of agriculture-grade urea per year for industrial uses that results in subsidy leakage of around Rs 6,000 crore, an official said.

In the last two-and-a-half months, the government has identified leakages worth Rs 100 crore through various covert operations.

The Centre provides urea at a highly subsidised rate of Rs 266 per bag (of 45 kg) to farmers. It has to bear a subsidy of over Rs 2,700 per bag.

A senior official of the Ministry of Chemicals and Fertilisers said there is an annual requirement of around 13-14 lakh tonnes of technical-grade urea for industrial usage, of which only 1.5 lakh tonnes are produced in the country. The industry imports only 2 lakh tonnes, as against the required level of more than 10 lakh tonnes.

"According to our estimate, about 10 lakh tonnes of agriculture-grade urea is getting diverted every year. The subsidised urea is getting diverted mainly to industries. Some quantity goes to neighbouring countries," the official said, adding this causes a subsidy leakage of nearly Rs 6,000 crore.

Urea is used in various industries such as resin/glue, plywood, crockery, moulding powder, cattlefeed, dairy and industrial mining explosives. 

The agriculture-grade urea is neem-coated while technical-grade urea is not. The neem-coating is removed through some chemical process and then the urea is used for industrial purposes, the official said.

A nationwide crackdown against erring units has been launched by the Department of Fertilisers, along with states and other various central authorities.

"A leakage worth more than Rs 100 crore has been identified by various covert operations during the last two-and-half months. Investigations are still on and this figure may rise further," the official said.

The Department of Fertilisers has constituted a special team of dedicated officers -- 'Fertiliser Flying Squad' -- for surprise inspections of units involved in diversion, black marketing, hoarding and supply of sub-standard quality of fertiliser.

The Centre has asked states to take action as fertiliser is an essential commodity.

In the crackdown so far, the department identified GST evasion worth Rs 64.43 crore by industrial-grade urea suppliers. The information has been shared with the GST department and Rs 5.14 crore has been recovered so far.

"Unaccounted stock of agriculture grade urea of about 25,000 bags worth Rs 7.5 crore has been recovered. Six persons have been arrested under the CGST Act, 2017 and remanded to judicial custody. Follow up investigation is under process," the official said.

The department has also launched crackdown on 38 manufacturing units of mixture fertilisers across eight states.

"Samples have been collected for quality analysis. 70 per cent samples were found sub-standard. Manufacturing licences of 25 erring units were cancelled," the official added.

These manufacturers get subsidised fertilisers to make mixtures.

On May 20, a multi-pronged crackdown was launched on diversion of fertilisers in 52 units across six states.

"Unauthorised urea stock of 7400 bags (worth Rs 2.2 crore) were seized. Out of 59 samples of suspected urea collected from these units, 22 were found to have neem oil content so far," the official said, adding that seven FIRs/complaints have been registered against the units.

On July 9, the department conducted raids on 23 mixtures manufacturing unit in Gujarat.

"15 samples of 9 units have been sent for quality analysis. Action shall be taken against erring companies after reports. Stop sales notices have been issued against 2 units and fertiliser has been seized," the official said.

On diversion to neighbouring countries, the official said a campaign was launched in districts close to the Nepal border and it has been successful to a large extent.

"Nepal did not use to import urea. But it is doing so from last two years," the official added.

India's annual domestic demand of urea is around 350 lakh tonnes, of which 260 lakh tonnes are locally produced while the remaining is imported.

The government's annual fertiliser subsidy bill is likely to be around Rs 2.5 lakh crore during this fiscal because of high international prices.

Earlier, Chemicals and Fertilisers Minister Mansukh Mandaviya had asserted that the government would not pass on the burden of rise in global prices to farmers.