NITI moots Rs 15,431 per hectare DBT to farmers, suggests dropping 6 subsidies

The NITI Aayog has flagged many challenges and difficulties in going ahead with the proposal

At a time when the government is keen on disbursing agricultural subsidies through direct benefit transfer (DBT), many people have said it could be counter-productive unless various factors are taken into account.  

Those skeptical about the move said issues related to tenant farmers, regional- and village-level use of fertilisers and other agriculture inputs need to be addressed for the move to be successful.

Infact, NITI Aayog, tasked to provide a road map for DBT in farm subsidies, has flagged several challenges in going ahead with the proposal, including transferring the benefit to part-time and temporary farmers, who could avail the benefit, showing their land records.

According to rough estimates, Rs 15,431 could be transferred against each hectare in lieu of doing away with six major subsidies — on fertilizers, power, credit subsidy (mainly interest subvention on short-term crop loans), insurance, seed and subsidy given for machinery and irrigation equipment.

The government will have to spend about Rs 2.16 trillion for abolishing the six major farm-related subsidies.

The proposal was mooted a few months back by the Prime Minister’s Office (PMO) as a step towards rationalisation of agriculture subsidies and directly transferring the benefit to the farmers instead of passing it through intermediaries.

The proposal would have also given direct cash to farmers against the six major subsidies and could help lower the distress seen in the farm sector.

However, senior officials said given the complexities of the proposal and difficulties in implementing it nationally, it remains to be seen how far it is carried forward.

In fact, even in NITI Aayog, which was tasked with the work of preparing a blue print on DBT in agriculture, a lot of objections and queries have been raised on the proposal. “The NITI Aayog’s paper on the subject also does not overtly favour DBT in fertilizer and says the current practice adopted a few years ago should not be tinkered with,” officials said.

Unless the challenges highlighted by NITI Aayog in its proposal and the analysis of DBT in agriculture subsidies are carefully considered, the entire concept could fall flat, they added.