India scraps fertiliser price rise

India scraps fertiliser price rise

The Prime Minister said 'listen to your brahma'

Jaswant Singh, Finance Minister

India's finance minister has listened to his "inner voice", and scrapped a fertiliser price rise which would have hit the country's struggling farmers.

Jaswant Singh said that, following considerable protest, he was withdrawing plans to raise the price of a bag of urea by 12 rupees, and of other fertilisers by 10 rupees a bag.

The increases, which would have raised 7bn rupees, were announced last month in a Budget seen as pro-healthcare, education and business.

And they were welcomed by environmentalists, and critics of the levels of state cash ending up fertiliser firms' coffers.

But the rises were attacked by India's huge farming population, struggling to recover from what has been termed India's worst drought in 120 years.

With 70% of India's 1 billion population living in the countryside, many MPs also feared for the broader impact on rural economies.

And even government allies such as the Bahujan Samaj Party, expressed concerns.

"The farmers' interests have not been addressed fully," senior BSP MP Rashid Alvi said two weeks ago.

'Listen to your brahma'

Mr Singh's u-turn was revealed at the end of a speech on the Budget to India's parliament, and announced so subtly that the finance minister was forced to stand up again to clarify his statement.

"I met the Prime Minister and asked him... what should be done about the fertiliser price hike," Mr Singh said, according to a report in India's Financial Express.

"The Prime Minister said 'listen to your brahma (inner voice)'."

"I listened to my brahma. If the House so desires it, so be it. It's a small thing, but took too much attention of the House with members and speakers getting vociferous over the issue."

Urged to clarify, he said: "Yes. I have withdrawn the fertiliser price hike."

Credibility damage

The withdrawal was welcomed by the Fertiliser Association of India which, while claiming to back gradual rises in fertiliser prices, questioned Mr Singh's timing.

"The timing of the hike was not right as some farmers have not recovered yet from the losses suffered due to drought," FIA director general Viren Kaushik told the Financial Express.

"We suggest that the government... should bring about increases at the right time when farmers can absorb it."

But Saumitra Chaudhury, economic advisor at credit rating agency Icra, said the u-turn had damaged Mr Singh's credibility.

Mr Chaudhury added: "There was so much of difference on the fertiliser issue within the [ruling] Bharatiya Janata Party.

"They should have come to some conclusion before stating it in the Budget."