Cabinet approves direct benefit transfer for fertiliser subsidies

NEW DELHI: The government on Tuesday decided to implement direct benefit transfer (DBT) for fertiliser subsidy payments across India, seeking to prevent diversion of fertilizers for commercial use and generate data on the usage of the nutrients to help farmers.

The department of fertilisers has already rolled out the programme in most states, data from which shows that transaction time and alleged instances of overcharging by retailers have come down. Also, offtake has moderated, suggesting that overuse of subsidised fertilisers and its diversion for industrial use has declined. As a result, the union government could limit the fertiliser subsidy for 2017-18 to ₹64,999 crore in the revised budget estimate, a reduction of more than 7% from the initial estimate made at the beginning of the fiscal year.

The DBT model for fertilisers, however, is slightly different from that for others such as cooking gas, in which the ultimate consumer gets the entitlement in their bank account. That is because farmers cannot be forced to pay large amounts upfront on fertilisers and wait for reimbursement.

“DBT would entail 100% payment to fertiliser companies on sale of fertilisers to farmers at subsidised rates,” said the official statement. At the time of the sale, details of the buyer, the quantity, Aadhaar and land records wherever available and soil health will be captured using a point of sale machine. The subsidy amount will be settled in a few days with the manufacturer, a system that will put an end to the precedence of subsidy in the fourth quarter spilling over to the next fiscal.