The government provides about Rs 70,000-crore fertiliser subsidy annually.
As 93% of farmers are buying fertiliser in cash (only 6% on credit) from retailers, the majority of them prefer the current system of subsidy to continue, rather than shifting to DBT, under which the subsidy amount will be transferred to their bank accounts, according to a study commissioned by the Niti Aayog. It also said that the government saved $1.54 billion (about Rs 10,800 crore) in the first year of implementation of the Aadhaar-enabled sales through PoS machines.
The government provides about Rs 70,000-crore fertiliser subsidy annually. Currently the subsidy is transferred to the fertiliser companies (since October 2017) based on actual sales captured by PoS machines at the retailer level. Farmers are mandated to show their Aadhaar card to buy these subsidised fertilisers. But the government is planning to launch a pilot project in some select districts, under which farmers will get the subsidy in their bank accounts.
According to the study, conducted by MicroSave Consulting (MSC), 63.6% of farmers surveyed said they would prefer to buy the fertiliser at a subsidised rate rather than purchasing at the market rate and getting the subsidy later. Currently, farmers buy a 45-kg bag urea at Rs 242, which may go up to Rs 900 if subsidy is transferred to the bank accounts. Sources said the government is considering measures to help farmers buy fertilisers without feeling any kind of immediate financial burden. One of the important findings in this study is farmers’ willingness to go digital. As many as 42% farmers were ready “to pay using a cashless mode, such as debit or credit card and wallets in future — if sufficient payment infrastructure was ensured,” the report by MSC said. It also said instances of manual sales without Aadhaar and ‘adjusted’ transactions fell from 21% in the third round of evaluation to 13% in the current round. Adjusted transactions are those that retailers often undertake without verifying farmers’ credentials, only to update their records later, it said.
Among Aadhaar-authenticated transactions, the study showed 86.6% were successful on the first attempt. Overall, successful Aadhaar authentication in three attempts increased to 99% in the current round from 97% in the third round of evaluation. The average time it takes for a transaction via PoS devices improved to 3-4 minutes in the current round from 4-5 minutes in previous survey.
Under the current system, retailers can also use the Kisan Credit Card or Electoral Photo ID Card to sell fertiliser if a farmer has not received an Aadhaar number after enrolling for it. The MSC conducted the fourth round of evaluation from July to October 2018. The quantitative research was done with 1,182 retailers and 11,281 farmers across 18 states and 54 districts.