Proof of concept mulled for direct subsidy transfer in fertiliser

Export of all categories of fertiliser now under restrictive category

The fertiliser ministry has proposed to launch a pilot project "proof of concept” to track receipt of subsidised fertiliser to the farm gate level and feasibility of disbursement of fertiliser subsidy directly to the retailer - farmer.
 
This pilot project is aimed at implementation of direct transfer of subsidy as implemented oil ministry for disbursing the subsidised LPG cylinders.  

Currently, subsidy is released through the fertiliser industry, either through the manufacturer of fertiliser or marketer or importer of the commodity. The proof of concept is proposed to be held in 7 States viz. Haryana, Andhra Pradesh, Tamil Nadu, Rajasthan, Madhya Pradesh, Assam and Maharashtra in approximately 50-70 blocks.

To this effect,  the department will be appointing  a a consultant for implementation of proof of concept (pilot) study for examining the feasibility of implementation of tracking of fertilizers to the farm gate level and disbursement of subsidy direct to the retailer (farm gate/farmer).
 
Besides, according to officials, the fertiliser ministry has requested Directorate General of Foreign Trade (DGFT) to keep all fertilisers under the restrictive category.  This is as against the earlier directive of treating export of Di-Ammonium Phosphate (DAP) and Muriate of Potash ( MoP) as these are mostly imported under restrictive category.

The latest request is to treat all other categories like nitrogen, phosphorous, SSP, ammonia and respective complexes etc under restrictive category. According to officials, this follows complaints of smuggling of subsidized fertilizers to the neighboring countries.

According to officials,  due to the availability of the fertilizers in the country and the subsidy paid thereon, in addition to urea, the Government has decided to put the export of all category of fertiliser used in India  under restrictive category.
 
These measures are aimed at plugging the leaks of subsidised fertiliser meant for the agricultural sector and farmers. Along with this direct transfer the department has also taken various measures to check illegal export of fertiliser out of India and creating buffer stock of urea in major states as a pilot project.  
 
Similarly, to maintain stocks of urea in case of disruption of supplies the department has initiated a buffer stocking scheme for urea which is under implementation in major States.

The buffer stock can take care of shortfall in case there is either a shortfall in production due to disruption in supplies of feed-stocks or delay/ disruption in imports and to tide over the sudden spurt in demand/shortages. The company operating the buffer stock will be entitled to Inventory Carrying Cost (ICC) at a rate 1 percentage point less than the PLR of SBI as notified Direct Subsidy to the farmers under NBS
 
Under the present subsidy regime, fertilizers are provided to the farmers at the Maximum Retail Price, which is much below the actual cost of fertilizers. Accordingly, the farmers pay 25-40% of the actual cost of fertilizers and rest of the cost is borne by the Government.