Economic Survey 2018: As the direct benefit transfer (DBT) in fertilisers is delayed due to reluctance of states to roll it out, the Economic Survey has floated the idea of replacing this input subsidy with direct income support to farmers. It argued that there is a need for “replacing untargeted subsidies (power and fertiliser) by direct income support to address agricultural stress and to achieve doubling farmers’ income. The Prime Minister had announced to double farmers’ income, currently estimated at Rs 77,976 annually, by 2022. The government has been spending nearly 30% of its total subsidy on food, fuel and fertiliser to ensure that farmers get the key agriculture input at cheaper rates. The total outgo on fertliser subsidy alone was Rs 70,000 crore in 2017-18. The Telangana government has announced to start an input assistance scheme by paying Rs 8,000 per acre to each farmer every year to enable them recover costs of fertilisers, seeds and pesticides. Experts have viewed this as an alternative to various subsidy schemes by the government in the farm sector.
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The survey pointed out that agriculture matters for economic reasons because it still accounts for a substantial part of GDP (16%) and employment (49%). Poor agricultural performance can lead to inflation, farmer distress and unrest, and larger political and social disaffection — all of which can hold the economy back.
The Centre had introduced the direct benefit transfer (DBT) system for fertiliser subsidy on a pilot basis from October 2016. Currently, the DBT scheme is under implementation in 17 districts in 14 states. But the Centre has decided to extend the DBT scheme to other states in a phased manner. Both lead fertiliser companies in a state and the government machinery are slow in preparing the necessary infrastructure for the roll-out.
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Under the DBT system, 100% subsidy on various fertiliser grades is released to fertiliser companies on the basis of actual sales made by retailers to beneficiaries. The sale of all subsidised fertilisers to farmers is made through point of sale (PoS) devices installed at each retailer shop. The beneficiaries are identified through Aadhaar, voter identity card and other instruments. The successful implementation of the DBT scheme depends on development of PoS devices at every retailer shop, training of retailers for using the device, stock initialisation in the PoS machine after verifying the physical stock at retail point and before making sales transactions.