Direct transfer of fertiliser subsidy facing a tough time

Officials say the programme might not yield desired results even at the pilot stage unless a proper identification of the end-user is done

The Centre’s plan for an early roll-out of direct transfer of fertiliser subsidy might face a hurdle identifying the end-user.

Officials in the nodal department said the programme might not yield the desired results even at the pilot-project stage unless the end user is identified properly.

 

The plan in fertiliser subsidy was to transfer the subsidy directly to the bank accounts of farmers on a per-hectare basis, instead of allocating these to the companies as is done now. This was intended to check leakages. “Though in-principle the department is in favour of direct cash transfer of fertiliser subsidy, there are many practical difficulties in implementation which needs to be addressed if the scheme is to become a success,” a senior official said.

One such difficulty, he said, was identifying the actual user. In India, a large number of farms is on lease and the tiller is separate from the owner. “If the subsidy is calculated on a per-hectare basis, then there might be a situation where the person who owns the land gets all the benefit, while the actual tiller is left out,” the official explained.

 

He said there were some views that instead of transferring subsidy to the farmers, it should be given on a per-bag basis but that too has not been decided. “Unless a mechanism is found to ensure that the subsidy is given to the actual farmer, there will be difficulties in implementing the programme,” the official added.

Another aim of the direct subsidy transfer was to correct the imbalance in usage, which at present is highly skewed in favour of urea. Urea is the cheapest fertiliser available in the country at present.

According to a report of the high-level committee on restructuring of Food Corporation of India, a direct subsidy of around Rs 7,000 a hectare could be transferred to farmers, while at the same time urea prices could be deregulated.

“It may be noted that this type of direct transfer of fertiliser subsidy in cash will go a long way in helping those who take loans from money lenders at exorbitant rates to buy fertiliser,” the report said.

The 2014-15 Economic Survey had suggested dovetailing the Jan Dhan Yojana with Aadhaar and the mobile platform to transfer cash subsidies directly to ensure minimum leakage.

It said Rs 3,78,000 crore or around 4.24 per cent of gross domestic product is annually spent by the Centre in providing subsidised rice, wheat, pulses, sugar, kerosene, liquified petroleum gas, naphtha, water, electricity, diesel, fertiliser, iron ore, through various schemes and programmes such as the public distribution system, cheap kerosene etc, a big portion of which does not reach the actual beneficiary.