Economics of Sustianed Rapid Growth in India Fertiliser Consumption

This paper presents a framework to discuss economics of sustained rapid growth in India’s fertilizer consumption. Major considerations suggested by the framework are then discussed against the backdrop of the past growth in fertilizer use to identify key policy issues and draw conclusions. Economics of fertilizer use is usually discussed in terms of factors which determine its profitability to farmers. Among these factors, prices of crops and fertilizers receive maximum attention since they can be altered by policy interventions. From this it follows that to discuss economics of growth in fertilizer use, we should concern ourselves with the necessary changes in the factors influencing farmers’ profitability of fertilizer use. The main thrust of this paper is that such an approach is not appropriate because it bypasses many considerations which are equally, if not more important. The paper is divided into five sections. Section I highlights the need to generate sustained rapid growth in India’ fertilizer consumption. Section II briefly summarises the conventional approach to discuss economics of fertilizer use and brings out the questions it raises. Section III presents an alternative approach which shows why the conventional approach and questions raised by it constrain the discussion of how to generate the desired rate of growth in fertilizer consumption which have important implications in discussing economics of further growth in its use. Finally, Section V draws some policy conclusions.