What's ailing India's fertiliser subsidy and ethanol policy? Ashok Gulati explains

Ashok Gulati says India's fertiliser subsidy model is fiscally unsustainable, heavily import-dependent and environmentally damaging. He advocates decontrolling fertiliser prices, replacing price subsidies with direct per-acre income support, and shifting incentives from water- and fertiliser-intensive paddy to pulses and oilseeds. Gulati also criticises the use of rice for ethanol production as highly inefficient and virtually unheard of elsewhere, arguing that maise is a far more suitable feedstock. He warns that without 1991-style structural reforms, the subsidy bill — budgeted at Rs 1.7 lakh crore — could balloon to Rs 3 lakh crore, widening the fiscal deficit at a time when India is already under pressure from El Niño, a weakening rupee and rising import costs.

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