To reduce fertilizer use, govt eyes direct subsidy transfer


NEW DELHI: In its bid to disincentivise farmers from excessive use of chemical fertilizers, the government is preparing to move on a long considered proposal for direct cash transfer of the subsidy amount to farmers’ bank accounts.

The funds transferred will be used only for buying soil nutrients while two options are being explored to decide the cash subsidy — either by fixing the amount per acre/ hectare or a lumpsum amount for all identified beneficiaries on the lines of PM-Kisan scheme, official sources said.

The plan to move to DBT will be a fundamental change in the manner in which fertilizer subsidies are administered in India as funds have been transferred to manufacturing and retailing companies. Direct payments to farmers are seen as better to ensure delivery of subsidies to the end user.


The draft report of a panel under Niti Aayog member Ramesh Chand had recommended the two options and consultations are on to finalise the plan. “Once the mechanism is approved, we will be able to roll it out in three to four months. Though authenticating size of land holdings is challenging, we can take the data from PM-Kisan, which has the details of beneficiaries and their land holdings,” said an official.

Currently, farmers are allowed to buy as much fertilizer as they want at subsidised rate and its based on a “no denying” policy. The government directly pays the subsidy amount to manufacturers or marketing firms. Under the new system, the subsidy will be credited to farmers.

The annual subsidy outgo for fertilizer was Rs 70,000 crore in 2016-17, over Rs 69,000 crore in 2017-18 and Rs 73,435 crore in the last financial year. Till June-end, the subsidy outgo in the current fiscal year was Rs 29,000 crore.

“There is a disincentive for those who may be going for excess use of chemical fertilizers. Once they know that they will get limited subsidy amount, they will use fertilizer judiciously. This will prove good for health of farmland and our outgo on subsidy will also reduce due to less usage,” said an official.

Some options are being considered for subsidy transfer. The government can open virtual accounts and these can be operated once the beneficiary enters a security code in the system for buying fertilizer. “In this case, the beneficiary will get a message as soon as the amount is transferred and he/she will receive a code to be used to make the payment at retail shop after authentication,” the official said.

The second option is that an e-wallet will be created in the bank account of every beneficiary and the amount transferred for fertilizer subsidy will be kept in this and can be used only for buying fertilizer.

Officials there were a few hurdles which needed to be dealt with. Some of the states have not yet joined the PMKisan scheme.

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