While the government is planning nationwide roll-out of direct benefit transfer (DBT) system for payment of fertiliser subsidy using Point of Sale (PoS) machines at the retail outlets from June, the Fertiliser Association of India (FAI) has raised concerns over the possible delay in payment of subsidy amounts to manufacturers due to network failures in PoS operations and biometric authentication glitches. The trade body has asked for stablisation of DBT implementation in 19 pilots districts before rolling out across the country.
Currently, under a pilot project on DBT in fertilizer subsidy is being implemented where soil nutrients — urea and micro-nutrients like nitrogen, phosphorus and potassium (NPK) sales are being conducted using PoS machines to farmers whose authentication is done through Aadhaar cards, voter IDs or Kisan credit cards. With retail fertiliser outlets equipped with PoS machines that can read Aadhaar cards, as a farmer buys fertilisers at subsidised rate, the difference between the market rate and subsidised amount is credited to the bank account of the manufacturer.
“Companies have incurred all cost upfront and non-payment of subsidy has affected cash flow adversely,” Satish Chander, director general, FAI stated.
He has noted that it was necessary that DBT is first stabilised in pilot districts before expanding across the country. The finance ministry has allocated `70,000 crore under fertilizer subsidy for FY18.
Meanwhile, the fertiliser ministry has asked fertiliser firms to fulfil the deadline of the procurement of about 1.76 lakh PoS machines by end of May 2017. These machines would have to be installed at all the registered fertiliser dealers so that from Jun onwards all the fertiliser sales would done through PoS machines.
Chander has pointed that while the fertiliser companies associated with pilot DBT districts are allowed to generate weekly subsidy claims, “however in practice no subsidy bill has been processed or paid so far,” according to an article in in the trade journal – Indian Jounral of Fertilisers.
Another problems faced by fertiliser firms include network connectivity in rural areas which is hampering functioning of PoS machines in many states thus leading to delay in transactions.
Besides FAI has urged the government to incentivise retailers who are loaded with additional responsibility sell fertilisers using PoS machines which requires accurate capturing of record of transactions. “The farmers’ bank accounts should be seeded with fertiliser sales which would facilitate transfer of subsidy to farmers accounts directly when DBT is implemented in true spirit,” Chander has stated.
Since October, 2016, DBT in fertilizer is being implemented in 19 districts—Gorakhpur; Kishanganj and Begusarai (Bihar); Dhanbad (Jharkhand), Hoshangabad (Madhya Pradesh); Pali (Rajasthan); Nashik and Raigad (Maharashtra); Narmada (Gujarat); Krishna and West Godavari (Andhra Pradesh); Ranga Reddy (Telangana); Tumkur (Karnataka); Thrissur (Kerala); Karnal and Kurukshetra (Haryana); Una (Himachal Pradesh) and Malda and South Parganas (West Bengal).
According to officials, DBT to beneficiaries’ bank accounts — like in the cooking gas scheme — cannot be introduced in the fertiliser sector as the beneficiaries and their entitlements are not clearly defined. As many as 80 subsidised products — including urea, phosphatic and potassic fertilisers — have different subsidy rates. The amount of subsidy on urea for instance is more than double the maximum retail price and so it is a financial burden on the farmers to pay the market rates (including subsidy) upfront and receive the subsidy amount subsequently.