Fertiliser dept insists on new bank accounts

Task force under UIDAI Chairman Nandan Nilekani will meet on March 16.

The Department of Fertilisers (DoF) has suggested opening bank accounts for farmers to create a foolproof system for transferring the subsidy directly to them. The department is likely to put up the proposal in the meeting of the committee formed under Nandan Nilekani on Wednesday.

DoF has also worked out a draft proposal on how to implement the mechanism effectively on directly doling subsidies to farmers. The meeting would also be attended by officials from the ministries of petroleum, agriculture and consumer affairs and public distribution.

The committee under Nilekani has already met once after the proposal was announced in the Budget, to understand what ministries have done so far to shift into this mode of subsidy payment.

However, the main challenge in implementing such a system are the country’s fraudulent and fake land records, which make it an arduous task to identify the actual farmer. The Land Tenancy Act gives more powers to absentee landlords, who are not the actual cultivators, hence, do not buy fertilisers, officials in DoF who refused to be identified told Business Standard.

DoF had earlier mooted the idea of issuing smart cards for farmers, to track those buying fertilisers and then give them subsidies, as a pilot project. However, it has now decided to create the system based on unique identification numbers.

The department has also asked the National Informatics Centre to create a reliable database of villages and farmers.

Finance Minister Pranab Mukherjee has given a deadline of March 2012 when subsidies would be directly handed to targeted individuals. He wanted this done for oil, food and fertiliser subsidies, expressing serious concerns over it not reaching those who need the most and avoid pilferage in the system.

The task force would also seek to align the issuance of unique identification numbers to track the target beneficiaries.

At present, the government provides kerosene at subsidised rates to families living below the poverty line through the Public Distribution System. It also provides LPG at a subsidised rate to households. For fertilisers, the government provides subsidy to companies so that farm inputs, which include urea and imported fertiliser, can be provided to farmers at cheaper rates.

The revised estimates put the subsidies bill at Rs 1,64,153 crore for 2010-11. However, the government’s subsidy bill on food, petroleum and fertilisers is estimated at Rs 1,34,210 crore for 2011-12.

This includes Rs 38,386 crore revised estimates for petroleum subsidy against Rs 3,108 crore in Budget estimates for 2010-11 and Rs 1,54,212 crore and Rs 54,976 crore revised estimates for food and fertiliser subsidy for 2010-11, respectively.