India’s massive demand for natural gas is a result of its easy substitution of liquid fuels such as naphtha, fuel oil, diesel etc. India at present is producing less than 100 million standard cubic meter per day (MMSCMD) and another 50 MMSCMD is imported as liquefied natural gas (LNG) (Fertiliser Statistics, 2011-12, Fertiliser Association of India). As natural gas has competing demands from different sectors of the economy for adequate energy—being a clean fuel, requiring less investment and yielding a number of industrial products, it can easily record an additional usage of 100 MMSCMD or more in the near future. Thus, allocation and price have always been regulated by the Indian government.
There is no doubt that natural gas is the cleanest fuel with its lowest carbon content irrespective of where it is used. Fertiliser, however, uses gas as feedstock unlike power generation where it is burned as fuel. Used as fuel, the carbon in natural gas is converted into carbon dioxide and emitted. But in case of fertiliser (urea) production, both hydrogen and carbon are used, which reduces the emission of green house gas.
While the demand for natural gas has always exceeded the availability for last two decades, there were times when natural gas was flared as waste with no downstream users. At this stage government decided to use the natural gas for production of fertilisers mainly in the western region near the gas resources. Three large fertiliser plants came up in Gujarat and Assam during 1967-1969. The gas available offshore of Western coast including Bombay High (started in late 1970s) was again, first utilised for the making of fertilisers. Five urea plants were commissioned at Rashtriya Chemical and Fertilisers (RCF Thal) and Krishak Bharati Cooperative Limited (KRIBHCO, Hazira) in 1984-85. This helped to reduce flaring of natural gas.
In the 1980s, various expert groups and committees recommended that the best use of natural gas was in the making of fertilisers. Besides it is well understood that fertilisers being a vital input for agriculture its prices should remain affordable to the farmers. Cost of production of urea using domestic gas is, at present, about Rs 10000-12000 per mt and will be affordable to the farmers even without subsidy. The cost of production of urea is high due to use of imported gas and liquid fuels and the government is providing large amounts of subsidy to regulate the prices of fertilisers at levels which can encourage their use.
The Hazira-Vijaipur-Jagdishpur (HVJ) pipeline was planned in order to locate fertiliser plants in areas of consumption. The pipeline, commissioned in 1987, saw the simultaneous sanctioning of six fertiliser plants, three of which were commissioned in 1987-88 while the other three spilled over to the early 1990s. Later, however, with indiscriminate allocation of gas and availability being less than estimates, shortage ensued in the late 1990s. In addition, Oil and Natural Gas Corporation Limited’s (ONGC) gas production started declining and rationing amongst existing consumers resulted in further shortage for the fertiliser plants till imported LNG was made available in 2005. Some relief was also provided by gas from public-private joint venture projects. Also, allocation from Krishna-Godavari basin (KG-D6), supply of which started in March 2009, filled the shortfall. But with consequent drastic reduction in production from KG-D6 fields the shortage of domestic gas continues. In view of this, there are often arguments against giving first priority to the fertiliser sector in the allocation of gas.
It is argued that fertilisers can be imported but power cannot. A few facts can clarify the position. India is the second largest consumer of fertilisers in the world, next to China. About 59 mt fertiliser products were used in 2011-12. Of this only about 16 mt were produced in the country using indigenous raw materials—domestic natural gas and indigenous rock. The balance, either raw material or finished products was imported. Imported raw materials include rock phosphate, sulphur, phosphoric acid, ammonia and LNG, while finished products include urea, diammonium phosphate (DAP), muriate of potash (MoP) and more. Thus India is heavily dependent on imports to the extent that almost 73 per cent of its requirement are met from outside. In such a situation, suppliers being few, India often finds itself facing cartelisation, pushing the procurement prices up further. It does not augur well for a country the size of India to have such a low level of self sufficiency, and it is definitely not desirable to increase our import dependence further.
Urea was the only product for which India had achieved self sufficiency in 2000-01. However today India imports 8 mt of urea out of its consumption of 30 mt in 2012-13 (Annual Review, 2012-13, Fertiliser Association of India). According to estimates available, fertiliser subsidy burden of the Indian government exceeded 1 lakh crore in 2012-13 (ibid.). Therefore, any increase in cost of fertiliser will increase the subsidy further and put extra burden on the exchequer. Alternatively, the prices will have to be raised which will affect the demand and consumption and in effect agricultural production.
Fertiliser plants are at present using a total of 46 MMSCMD of gas. Of this, domestic supply is 31 MMSCMD and balance is imported LNG. It is expected that shortage will increase due to dwindling supply of gas from existing fields of ONGC and KG-D6. Five fuel oil and one naphtha based plants have changed the feed from fuel oil and naphtha to natural gas in 2012-13 with combined investment of more than Rs 5000 crore under policy direction of the government. There is an immediate demand of additional 10-11 MMSCMD of gas in the industry to produce 23 mt of urea at full capacity.
The use of natural gas for production of fertilisers is justified for technical, economical and strategic reasons. If fertiliser production is allowed to fall from the present low level of self sufficiency, due to non availability of gas, fertiliser security and hence food security of the country will be compromised and no country of India’s size can maintain its sovereignty without its food security.
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- In the Large States category (overall), Chhattisgarh ranks 1st, followed by Odisha and Telangana, whereas, towards the bottom are Maharashtra at 16th, Assam at 17th and Gujarat at 18th. Gujarat is one State that has seen startling performance ranking 5th in the PAI 2021 Index outperforming traditionally good performing States like Andhra Pradesh and Karnataka, but ranks last in terms of Delta
- In the Small States category (overall), Nagaland tops, followed by Mizoram and Tripura. Towards the tail end of the overall Delta ranking is Uttarakhand (9th), Arunachal Pradesh (10th) and Meghalaya (11th). Nagaland despite being a poor performer in the PAI 2021 Index has come out to be the top performer in Delta, similarly, Mizoram’s performance in Delta is also reflected in it’s ranking in the PAI 2021 Index
- In terms of Equity, in the Large States category, Chhattisgarh has the best Delta rate on Equity indicators, this is also reflected in the performance of Chhattisgarh in the Equity Pillar where it ranks 4th. Following Chhattisgarh is Odisha ranking 2nd in Delta-Equity ranking, but ranks 17th in the Equity Pillar of PAI 2021. Telangana ranks 3rd in Delta-Equity ranking even though it is not a top performer in this Pillar in the overall PAI 2021 Index. Jharkhand (16th), Uttar Pradesh (17th) and Assam (18th) rank at the bottom with Uttar Pradesh’s performance in line with the PAI 2021 Index
- Odisha and Nagaland have shown the best year-on-year improvement under 12 Key Development indicators.
- In the 60:40 division States, the top three performers are Kerala, Goa and Tamil Nadu and, the bottom three performers are Uttar Pradesh, Jharkhand and Bihar.
- In the 90:10 division States, the top three performers were Himachal Pradesh, Sikkim and Mizoram; and, the bottom three performers are Manipur, Assam and Meghalaya.
- Among the 60:40 division States, Orissa, Chhattisgarh and Madhya Pradesh are the top three performers and Tamil Nadu, Telangana and Delhi appear as the bottom three performers.
- Among the 90:10 division States, the top three performers are Manipur, Arunachal Pradesh and Nagaland; and, the bottom three performers are Jammu and Kashmir, Uttarakhand and Himachal Pradesh
- Among the 60:40 division States, Goa, West Bengal and Delhi appear as the top three performers and Andhra Pradesh, Telangana and Bihar appear as the bottom three performers.
- Among the 90:10 division States, Mizoram, Himachal Pradesh and Tripura were the top three performers and Jammu & Kashmir, Nagaland and Arunachal Pradesh were the bottom three performers
- West Bengal, Bihar and Tamil Nadu were the top three States amongst the 60:40 division States; while Haryana, Punjab and Rajasthan appeared as the bottom three performers
- In the case of 90:10 division States, Mizoram, Assam and Tripura were the top three performers and Nagaland, Jammu & Kashmir and Uttarakhand featured as the bottom three
- Among the 60:40 division States, the top three performers are Kerala, Andhra Pradesh and Orissa and the bottom three performers are Madhya Pradesh, Jharkhand and Goa
- In the 90:10 division States, the top three performers are Mizoram, Sikkim and Nagaland and the bottom three performers are Manipur and Assam
In a diverse country like India, where each State is socially, culturally, economically, and politically distinct, measuring Governance becomes increasingly tricky. The Public Affairs Index (PAI 2021) is a scientifically rigorous, data-based framework that measures the quality of governance at the Sub-national level and ranks the States and Union Territories (UTs) of India on a Composite Index (CI).
States are classified into two categories – Large and Small – using population as the criteria.
In PAI 2021, PAC defined three significant pillars that embody Governance – Growth, Equity, and Sustainability. Each of the three Pillars is circumscribed by five governance praxis Themes.
The themes include – Voice and Accountability, Government Effectiveness, Rule of Law, Regulatory Quality and Control of Corruption.
At the bottom of the pyramid, 43 component indicators are mapped to 14 Sustainable Development Goals (SDGs) that are relevant to the States and UTs.
This forms the foundation of the conceptual framework of PAI 2021. The choice of the 43 indicators that go into the calculation of the CI were dictated by the objective of uncovering the complexity and multidimensional character of development governance
The Equity Principle
The Equity Pillar of the PAI 2021 Index analyses the inclusiveness impact at the Sub-national level in the country; inclusiveness in terms of the welfare of a society that depends primarily on establishing that all people feel that they have a say in the governance and are not excluded from the mainstream policy framework.
This requires all individuals and communities, but particularly the most vulnerable, to have an opportunity to improve or maintain their wellbeing. This chapter of PAI 2021 reflects the performance of States and UTs during the pandemic and questions the governance infrastructure in the country, analysing the effectiveness of schemes and the general livelihood of the people in terms of Equity.
Growth and its Discontents
Growth in its multidimensional form encompasses the essence of access to and the availability and optimal utilisation of resources. By resources, PAI 2021 refer to human resources, infrastructure and the budgetary allocations. Capacity building of an economy cannot take place if all the key players of growth do not drive development. The multiplier effects of better health care, improved educational outcomes, increased capital accumulation and lower unemployment levels contribute magnificently in the growth and development of the States.
The Pursuit Of Sustainability
The Sustainability Pillar analyses the access to and usage of resources that has an impact on environment, economy and humankind. The Pillar subsumes two themes and uses seven indicators to measure the effectiveness of government efforts with regards to Sustainability.
The Curious Case Of The Delta
The Delta Analysis presents the results on the State performance on year-on-year improvement. The rankings are measured as the Delta value over the last five to 10 years of data available for 12 Key Development Indicators (KDI). In PAI 2021, 12 indicators across the three Pillars of Equity (five indicators), Growth (five indicators) and Sustainability (two indicators). These KDIs are the outcome indicators crucial to assess Human Development. The Performance in the Delta Analysis is then compared to the Overall PAI 2021 Index.
Key Findings:-
In the Scheme of Things
The Scheme Analysis adds an additional dimension to ranking of the States on their governance. It attempts to complement the Governance Model by trying to understand the developmental activities undertaken by State Governments in the form of schemes. It also tries to understand whether better performance of States in schemes reflect in better governance.
The Centrally Sponsored schemes that were analysed are National Health Mission (NHM), Umbrella Integrated Child Development Services scheme (ICDS), Mahatma Gandh National Rural Employment Guarantee Scheme (MGNREGS), Samagra Shiksha Abhiyan (SmSA) and MidDay Meal Scheme (MDMS).
National Health Mission (NHM)
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
MID- DAY MEAL SCHEME (MDMS)
SAMAGRA SHIKSHA ABHIYAN (SMSA)
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGS)