'Urea diversion to industrial units causing subsidy loss of Rs 6,000 cr'

New Delhi: The tall claims of the government of putting a complete check on the diversion of agriculture-purpose urea to industrial uses through neem coating have fallen flat as the Ministry of Chemicals and Fertilisers has claimed in its report that about 10 lakh tonnes of urea are being diverted to industrial purpose resulting to the loss of Rs 6,000 crore to the government exchequer.

In its report titled "Covert Operation", the Ministry of Chemicals and Fertilisers has claimed that it has identified leakages worth Rs 100 crore through various 'covert operations' conducted across the country in the last two-and-a-half months.

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

Explaining the initiatives taken by the ministry to curb diversion, a senior official said, "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 further said, "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," official said, adding that a huge quantity of diversion causes a subsidy leakage of nearly Rs 6,000 crore.

As per industry insiders, 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 while the industry is importing only 2 lakh tonnes against the required level of more than 10 lakh tonnes.

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

The Department of Fertilisers, along with states and other various central authorities, has launched a nationwide crackdown against erring units by constituting 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.

In the crackdown so far, the department has identified GST evasion worth Rs 64.43 crore by industrial-grade urea suppliers and 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.