1. Direct benefit transfer scheme off to slow start on fertiliser subsidy

Direct benefit transfer scheme off to slow start on fertiliser subsidy

About four-fifths of the 7,480 retail outlets in the 11 districts now have Aadhaar-reading PoS machines. “The DBT experiment in the current form is expected to marginally curb diversion of fertilisers for non-agricultural use.

By: | New Delhi | Published: March 22, 2017 8:10 AM
More than 3 lakh tonnes of fertilisers have been sold to farmers in 11 districts under a pilot direct benefit (subsidy) transfer or DBT scheme during the six weeks to mid-February this year. (Reuters)

More than 3 lakh tonnes of fertilisers have been sold to farmers in 11 districts under a pilot direct benefit (subsidy) transfer or DBT scheme during the six weeks to mid-February this year. Although this is just 0.5% of annual fertiliser use by India’s farmers and the subsidy amounts are transferred to fertiliser manufacturers — ideally, under a DBT scheme subsidies must be credited to bank accounts of farmers who buy fertilisers at market rates — the success of the experimental project bears out the scope of a pan-India DBT roll-out and resultant huge savings to the exchequer.
With retail fertiliser outlets are equipped point of sale (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.

About four-fifths of the 7,480 retail outlets in the 11 districts now have Aadhaar-reading PoS machines. “The DBT experiment in the current form is expected to marginally curb diversion of fertilisers for non-agricultural use. However, the government should allow farmers to buy fertilisers at market price and then the subsidy amount should be transferred to farmers’ bank account so that large-scale misuse of fertilisers (such as diversion to Nepal) could be curbed,” said Ashok Gulati, chair-professor, agriculture, at ICRIER.
In West Godavari and Krishna districts of Andhra Pradesh where DBT pilot projects are under way, PoS machines have been installed in almost all of the 2,000-odd retail outlets in these districts. The other districts — Una (Himachal Pradesh), Hoshangabad (Madhya Pradesh), Pali (Rajasthan), Rangareddi (Andhra Pradesh), Krishnaganj (Bihar), Karnal and Kurukshetra (Haryana), and Nashik and Raigarh (Maharashtra) — have also made considerable progress in installation of PoS machines at retail fertiliser outlets.
Seven more districts — Narmada (Gujarat), Tumkur (Karnataka), Malda and South Parganas (West Bengal), Begusarai (Bihar), Dhanbad (Jharkhand) and Gorakhpur (Uttar Pradesh) will commence the DBT scheme from the next kharif season.
Sources in the fertiliser ministry told FE that PoS machines would be installed at all outlets in the districts taken up for the pilot scheme on DBT in fertiliser soon. For better targeting of fertiliser subsidy, under DBT, once a farmer purchases a bag of fertiliser — urea and micro-nutrients like nitrogen, phosphorus and potassium (NPK) — PoS machines placed with retailers authenticate the identity through the Aadhaar number or Kisan credit cards and a recommendation of his soil condition and fertiliser requirement is generated.
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.

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