Good politics is bad for economics, and this is true of fertiliser subsidy. Driven by the political compulsion, fertiliser subsidy has come under severe criticism from all quarters.

The IIM Ahmedabad carried out a study which shows that fertiliser subsidy has increased significantly since 1991. It finds huge disparity in distribution of  subsidy in different states.

The UPA government in its budget for 2009-10 proposed a system of direct transfer of fertiliser subsidy to farmers. However, this study says that the proposed policy is misconceived and inappropriate.

To read entire report, log on to: http://www.iimahd.ernet.in/publications/data/2009-07-01Sharma.pdf