The government is likely to consider a proposal to provide subsidy directly to farmers in form of cash grants or fertiliser coupons. The matter is likely to come up for discussion in the meeting of Fertiliser Advisory Forum (FAF) on Wednesday.
Besides the fertiliser minister, agricultural ministers of all states, members of the Fertiliser Association of India (FAI), chief executives of state marketing federations and two representatives of farmers as well as dealers from each state are members of this forum.
Though FAF?s views are not binding on the government, any consensus will have a bearing on fertiliser subsidy as fertiliser minister Ram Vilas Paswan is part of the group of ministers (GoM) dealing with the issue.
Fertiliser subsidy is likely to reach a whopping Rs 50,000 crore for the current fiscal. Hence, finance minister P Chidambaram announced in Budget 2007-08 that an alternative method for delivering the subsidy directly to farmers would be found. Accordingly, the GoM consisting of agriculture minister Sharad Pawar, fertiliser minister Ram Vilas Paswan and finance minister P Chidambaram was constituted to explore ways of sustainable use of fertiliser besides deciding on pricing and subsidies.
In its report recently submitted to the FAI, Tata Consultancy Services (TCS) recommended that these payments could be made either through direct cash transfer to farmers? bank accounts or subsidy payment through pre-loaded smart cards.
If the subsidy is provided through coupons, it will reach the actual farmer and the role of middlemen will be eliminated. It can also be targeted to a particular segment of farmers such as the small and marginal farmers. However, prices of fertilisers will no longer be controlled and therefore, may reach international parity price. It will result in much higher level of subsidy to farmers than that being provided to the industry currently.