Govt working to directly transfer fertiliser subsidy to farmers

Currently, DBT is given to fertiliser companies who sell at a subsidised rate to farmers
After the direct benefit transfer (DBT) of fertiliser subsidies to producers, the government is working on its next goal: Transferring these subsidies directly to the bank accounts of farmers.

The finance ministry and NITI Aayog are working on a proposal to shift DBT in fertiliser from the producer to the consumer.

This will be placed before the political dispensation in power after the 2019 Lok Sabha elections. 

Business Standard has learnt that the plan is to use the database of landed farmers being created with the implementation of PM Kisan. The information will be used to provide fertiliser subsidies directly to farmers’ bank accounts.

“The plan is that fertiliser subsides along with the PM Kisan deposits will become sort of a targeted quasi-universal basic income for farmers. To start with, we will use the PM Kisan database and provide fertiliser subsidies directly to the accounts of only small and marginal farmers,” said an official, aware of the matter.

The person added that to begin with, the government will start pilot projects in a couple of districts before implementing the scheme nationwide. The scheme may take two-three years to bear fruit, pending approval from the political leadership of the day. 

However, officials conceded that a bigger problem persists, to which a solution will have to be found. There cannot be a uniform amount transferred to the bank accounts of farmers in lieu of fertiliser subsidy, unlike the Rs 2,000 being transferred to beneficiary farmers in every tranche, another official said. 

“The use of fertiliser varies widely around the country. A farmer in Punjab will consume way more fertiliser than say a farmer in Tamil Nadu. So, a single amount being transferred to every farmer isn’t the solution. The usage of fertiliser varies across regions and states and we will have to find a way around that,” the official said.

The Modi government had introduced DBT for fertiliser subsidy payments to producers on a pilot basis in 2016, and it was rolled out nationwide in 2018. Under the current system, 100 per cent subsidy on various grades is released to the fertiliser companies, on the basis of actual sales made by the retailers to the beneficiaries.

 Sale of all subsidised fertilisers to farmers/buyers are made through point of sale (PoS) devices installed at each retailer shop and the beneficiaries are identified through Aadhaar card and voter identity card, among others.

Benefits galore
  • Currently, DBT is given to fertiliser companies who sell at a subsidised rate to farmers
  • FinMin, NITI Aayog are drawing up plans for approval of DBT for farmers

  • PM Kisan database to be used, landed marginal farmers to be targeted initially
  • Officials says a single amount can’t be transferred to every beneficiary
  • This is because the usage of fertiliser varies from region to region