Iffco fear margin squeeze from direct subsidy transfer

Indian Farmers Fertiliser Cooperative Ltd (Iffco) fears a pressure on its margins after fertiliser subsidy is directly rolled out to farmers and retailers as recommended by the task force led by Nandan Nilekani.

Iffco managing director U S Awasthi said the government's move to a system of direct cash transfer to farmers would impact the company's bottom line. He said there would be resistance as consumption would come down.

He, however, said the company would help the government to move to direct transfer of fertiliser subsidy. "The challenge for the government would be to make it happen. We have to work together and make this successful. We have to move shoulder-to-shoulder with the government," he said.

In its interim report on direct transfer of subsidies, the task force yesterday recommended to have information on the movement of fertilisers along the entire supply chain to ensure up-to-date data with the government. In the second phase, which will still be an interim stage, subsidy will be released to the retailer when he receives the fertiliser. This will involve transfer of subsidy directly to the retailer’s bank account on receipt of fertiliser from the wholesaler.

In the long run, once the Aadhaar-enabled payments becomes operational, subsidy disbursement to farmers can be done directly into the bank accounts of the intended beneficiary, the report said.

Currently, subsidy is given to companies for selling fertilisers to farmers at concessional rates.