Even pilot DBT projects make little headway
The government may have implemented the direct benefit transfer (DBT) scheme for 14 crore consumers of LPG, but it is finding the going tough in the case of the fertiliser subsidy—there is an outgo of over R1 lakh crore on this for 11 crore farmers—nearly 30 months after DBT was first launched. Worse, the possibility of it taking off in the near future looks bleak with the government not able to finalise a pilot scheme for this as yet. As in the case of the food subsidy of R1.25 lakh crore, the reason for the slow progress is the lack of a database. The department of fertilizer and chemicals has informed the Parliamentary Standing Committee on Chemicals and Fertilizers that its pilot project to capture the retail sales of fertiliser to farmers in six districts has failed to make any headway—so, the next stage of DBT implementation has been put on hold as ‘there are problems in targeting, determining entitlements and preparing beneficiary databases’.
It is now studying other methods to trace each bag of fertiliser as it moves to the farmer, and also exploring the possibilities of implementing DBT in two districts of Odisha, but the talks with the state government are at only the feasibility study stage. If chief economic adviser Arvind Subramanian’s estimation is correct—and the LPG DBT experience suggests he is right—this slow progress is costing the government at least 25% of its total spending of around R3 lakh crore on subsidies. This savings could be spent on improving the irrigation infrastructure so that poor farmers, who are supposed to be the real beneficiaries of fertiliser subsidies could also avail of them —fertiliser usage is the highest among land that is irrigated and, by and large, the land owned by poorer farmers tends to be non-irrigated. Since all databases, such as the SECC one, that can be used for targeting food subsidies or various ones on farmer holdings, are controlled by the state governments—if the states don’t cooperate, Aadhaar-seeding of these databases is impossible—the best way to go about it is to share part of the savings in subsidies with the states.