The Wire: New Delhi: Friday, June 22, 2018.
Fertiliser ministry's RTI reply says the company gained from the Centre’s intervention but retained subsidy benefits, forcing the government to recover Rs 765.19 crore. The matter is now in Delhi high court.
The Indian Farmers Fertiliser Cooperative Limited (IFFCO), one of India’s biggest cooperative society which is in the core business of manufacturing and selling fertilisers, had procured cheap ammonia from Oman but sold it at the prevailing market prices without passing on subsidy benefits to farmers, the Ministry of Chemicals and Fertilisers recently submitted before the Central Information Commission (CIC). The ministry said that an amount of Rs 765 crore was subsequently recovered from the company.
Ministry refused to give information initially
The ministry, which was responding to a plea filed by Saurabh Sachdeva, had initially refused to divulge any information about how IFFCO had not passed on the subsidy to farmers despite getting it from the Centre. Through his application filed in April 2017, Sachdeva had sought photocopies of file no. 15011/67/2015-MPR pertaining to the recoveries made.
The Central Public Information Officer (CPIO) f the ministry had first denied the information seeking cover under section 8(a) of the RTI Act 2005, on the ground that it would “adversely affect the economic interest of the State”.
The applicant then moved the first appellate authority which upheld the CPIO’s order and it was then that the matter was brought before the CIC. In his order, Central Information Commissioner Bimal Julka noted that in the hearing before the commission, the appellant had reiterated that a “vague and ambiguous reply” was provided by the ministry, claiming exemption under section 8(1)(a) of the RTI Act, 2005, without explaining how the disclosure of information could adversely affect the economic interest of the country.
Cheap ammonia imported from Oman
The ministry then explained the background of the matter and submitted that a joint venture agreement was entered into between IFFCO and Oman India Fertiliser Company SAOC (OMIFCO) for supply of ammonia from the latter, which was materialised with the intervention of the government of India. IFFCO used this cheap imported ammonia for production of subsidised phosphatic and potassic (P&K) fertilisers.
The ministry also acknowledged that “the company procured cheap ammonia from its sources” but sold the fertiliser made “at the prevailing market prices without passing on the subsidy benefits to the farmers” and that “an amount of Rs 765 crores was recovered from the company on that account”.
Stating that IFFCO had gone to court against this recovery, the ministry further stated that disclosure of information could adversely affect its position in the legal proceedings.
Having heard both sides and after perusal of the available records, Julka said “it is evident that several pertinent issues regarding grant of subsidy benefits to the farmers were raised by the appellant.” He said the commission also instructed the ministry to furnish a self- contained note on the matter. Subsequently, Julka recorded that the under secretary in the ministry submitted a noted before the commission on June 15.
Fertiliser sacks being transported in boats in Southern India.
Julka said the ministry submitted that “IFFCO had not passed on the cheap input cost of ammonia imported under Ammonia OffTake Agreement (AOTA) by IFFCO in the form of lower prices to farmers.”
He also recorded that “fertilizer subsidy was paid by the government to make available fertilizer to the farmers. The subsidy which was meant for farmers was paid to the companies for transferring the same to the farmers in the form of reduced MRP of fertilizer. The AOTA between IFFCO and OMIFCO was materialized with the intervention of the Government of India.”
Under the said agreement, ammonia from OMIFCO was made available to IFFCO at a very concessional price, which was used by it to produce subsidised P&K fertilisers.
The ministry also told the CIC that from April 1, 2010, the subsidy was being paid under the Nutrient Based Subsidy (NBS) Scheme under which a fixed amount, decided on annual basis, was provided on subsidised P&K fertilisers as per the nutrient content.
MRP at par with those of other companies’
Fertiliser companies have been allowed by the government to fix the MRP (maximum retail price) at a reasonable level. However, the ministry said that it had observed that despite cheap input costs of ammonia imported under AOTA, the cooperative kept the MRP of its P&K fertilisers more or less same or higher than that of the same grades of similar fertilisers produced by other manufacturers with costly imported ammonia.
“In other words, by not reflecting the cheap input cost of imported ammonia in the form of lower MRP, as compared to other companies, IFFCO had not passed on the entire subsidy received from government to farmers and has unduly benefited,” the CIC recorded in his order.
Accordingly, Julka while making a mention of the submission said it was decided by the ministry to recover the undue benefits that accrued to the company with effect from April 1, 2010. “An amount of Rs 765.19 crores on account of undue benefits had been recovered from the existing payable subsidy claims relating to P&K fertilizers,” the ministry said in the submission, adding that IFFCO had filed a writ petition before the Delhi high court against this recovery.
While the ministry submitted that disclosure of such information could harm the economic interest of the state, the appellant said the matter was in “larger public interest” and, therefore, section 8(1)(a) of the RTI Act did not apply to it.
Julka, while quoting several high court orders in matters pertaining to “vague” applications or where the appellant does not specify what information is actually sought, held that in view of the facts of the case, submissions made by both the parties and the explanation offered by the ministry, no further intervention of the commission was required.
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