Economic Survey calls for fertiliser subsidy reform

Calling for reform in the fertiliser subsidy system, the government's Economic Survey 2015-16 said on Friday that there is a major need to rationalise fertiliser subsidies and plug leakages in the system.

"There is a need to rationalise fertilizer subsidy in an input, crop and region neutral format and minimise diversions," said the Economic Survey 2015-16 authored by Chief Economic Advisor Arvind Subramanian, tabled in parliament.

"The disbursal of subsidy on fertilizers should shift to DBT (Direct Benefit Transfer scheme), the benefits of which will be maximised, if all controls (including imports) on the fertilizer industry/outputs are lifted simultaneously," it said.

"In the case of Phosphatic and Potassic fertilizer subsidy, with the Nutrient Based Subsidy (NBS) scheme, a fixed amount of subsidy will be given on each grade based on their content," it added.

Last month, the agriculture sector sought extension of the DBT scheme for paying out fertiliser subsidies, in line with that in cooking gas and the December decision to start the scheme for kerosene.

"We are ready for direct benefit transfer of subsidy to farmers and are prepared to work with the government on this. We will capture the last mile data on customers and farmers and hope that next year onwards direct transfers can start," Fertiliser Association of India director general Satish Chander told reporters here after a pre-Budget meeting with Finance Minister Arun Jaitley.

The Economic Survey sharply lowered the economic growth forecast for the current fiscal to the 7-7.75 percent range, from the previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficit rainfall.