In a bid to plug diversion of sops to unintended beneficiaries, the government is planning a nationwide roll-out of direct benefit transfer (DBT) for fertiliser subsidies by April 1, 2018. In addition to small states and union territories including Delhi and 19 districts in other states where it is already under implementation, 12 states including Punjab, Madhya Pradesh, Uttar Pradesh, Rajasthan, Maharashtra and Andhra Pradesh are ready for launching the scheme in all their districts from next month, an official with department of fertilisers (DoF) said.
Under the DBT scheme, farmers purchase the soil nutrients at subsidised prices and the difference between actual cost of fertilisers and price paid by the farmers would be transferred to the manufacturers’ bank accounts subsequently.
Earlier, the plan was to roll out DBT for fertiliser subsidy throughout the country by July 2017; however, because of issues such as non-availability of internet connectivity in rural areas to link up point of sale (PoS) machines at retail outlets, the deadline was deferred.
PoS machines can read Aadhaar or Kisan Credit Cards of farmers and subsequently a recommendation of soil condition and fertiliser requirement is generated at retail outlets for ensuring authentication for payment to manufacturers.
The DoF official told FE that around 1.5 lakh PoS machines have been procured and are in the process of being installed at companies’ outlets and another 50,000 machines would be procured soon. The finance ministry has allocated `70,000 crore as fertiliser subsidy for FY18.
Fertiliser subsidy accounts for around 29% of the government’s estimated subsidy burden of Rs 2.45 lakh crore for FY18. Food subsidy is estimated at `1.45 lakh crore while the rest is allocated for kerosene and cooking gas subsidy as prices of petrol and diesel have now been linked to the market.
There are around 9,000 outlets selling fertilisers where DBT now on a pilot basis.
“We are working with the government to ensure that all the 2 lakh outlets are PoS-machine-enabled and the government has to ensure payment to manufacturer promptly,” said Satish Chander, director general, Fertiliser Association of India.
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.