Centre to leverage digital infra to optimise food, fertiliser subsidies

Government plans to use AgriStack and CBDC-based pilots to better target fertiliser and food subsidies, reduce leakages, and improve transparency in welfare delivery systems

As the country's digital penetration for a number of ongoing social welfare schemes reach critical mass, the Central government has embarked on a series of interventions to use the digital architecture already in place to more effectively target the two major subsidies of food and fertilisers. This, sources say, will also help it keep tabs on leakage and pilferage.

 

While using digital backbone for swift and corruption-free delivery of public goods has already being undertaken in several schemes, the targeting of food and fertiliser subsidies are the most recent development in this area.

 

The government is taking a two-pronged approach to this: the digital framework of AgriStack is being used for better targeting of fertiliser subsidies, while the network of digitised ration cards and end-to-end solutions is being leveraged for food subsidies.

 

In the case of fertiliser, officials said the Centre has also conducted a few pilot runs in some districts of Haryana using the AgriStack platform to better target fertiliser sales.

 

A few weeks ago, Union Fertiliser Secretary Rajat Kumar Mishra, in his address at an event, cited the example of Haryana, where he said an experiment to connect land, fertiliser usage, and crops grown using AgriStack has shown remarkable results.

 

In less than four months, he said, 102,000 tonnes urea was saved as compared to the same period last year while for DAP, the savings were over 72,000 tonnes.

 

Highlighting the excess usage of urea, he said that a government analysis in 2024-25 showed that 65 per cent of farmers in India bought 5-7 bags of urea in a year, which is reasonable, while the remaining 35 per cent took the maximum load of urea usage.

 

Mishra pointed out that 163 out of the 730 districts in the country have high fertiliser usage, with average urea consumption of about 100,000 tonnes. “This means that these districts consume around 2.2 million bags of urea every year, and farmers know that this is unreasonable,” he said.

 

At a recent meeting with state government representatives, Union agriculture ministry officials also floated the concept of integrating the sale of urea with farmer IDs generated as part of AgriStack in a phased manner, beginning with pilot projects in select districts, a source who declined to be named said.

 

Under the first phase, officials said pilot runs were being conducted in seven districts where a relatively high number of farmer IDs have already been generated.

 

During this phase, the farmer ID will be used to ensure that fertilisers are sold only to the landowner, the cultivator, or a person explicitly authorised by them to make the purchase.

 

Officials said the first phase of the pilot will include an advisory mechanism for farmers who purchase fertilisers in quantities higher than the recommended dose. This, they said, is meant to discourage excessive use without immediately restricting sales.

 

In the second phase, the ministry plans to expand the integration of urea sales with AgriStack to other states, sources said.

 

This phase could also introduce limit on fertiliser sales based on ICAR-recommended dosages, taking into account factors such as the crops sown, landholding size, and irrigation availability.

 

As per official data, as of December 4, 2025, around 7.67 crore farmer IDs or digital identity of farmers have been generated as part of the Digital Agriculture Mission. These IDs these capture their demographic profile, landholding, and cropping patterns.

 

The mission envisages the creation of a Digital Public Infrastructure (DPI) for Agriculture, such as AgriStack, Krishi Decision Support System, and a Comprehensive Soil Fertility and Profile Map, besides other informative technology (IT)-driven initiatives to enable a robust digital agriculture ecosystem in the country. The Centre in September 2024 provided Rs 2,817 crore for the Digital Mission.

 

The target is to cover 11 crore farmers by FY27, with 9 crore such cards likely to be generated by the end of FY26.

 

Sources said that union agriculture ministry officials told state government officials during their recent meeting that states should aim to saturate coverage of Farmer IDs and complete geo-referencing of agricultural land to strengthen the foundational databases under AgriStack.

 

The ministry said all districts should conduct digital crop surveys by the kharif 2026 season, and emphasised the need for dynamic updating of the Farmer Registry whenever there is a change in land ownership or Records of Rights to ensure data remains current and accurate.

 

Officials also asked states to establish a dedicated AgriStack commissionerate or directorate, supported by a project management unit (PMU), to ensure long-term sustainability and effective implementation of the digital agriculture framework.

 

The ministry has also told state government officials that AgriStack should be integrated across all sectors, schemes and services, including direct benefit transfers, agricultural inputs, credit, insurance, storage, and procurement to enable seamless service delivery.

 

Chief secretaries of state governments have been urged to take the lead in driving convergence across departments and ensuring full adoption of smart, data-driven agriculture initiatives in their respective states.

 

In their recent addresses at the Business Standard Manthan 2026 event last week, both Finance Minister Nirmala Sitharaman and Agriculture Minister Shivraj Singh Chouhan touched upon the concept of AgriStack as being a significant development in rationalising urea sales.

 

In fact, Chouhan, during his fireside chat, hinted at broad agreement for the concept of applying direct benefit transfers (DBT) to fertilisers, as well.

 

“There should be ‘Manthan’ on this. I am also asking farmers for their opinion because using technology the fertiliser subsidy can be transferred directly to the farmer's account. We are looking at this possibility as well. If you ask me, I would like to say that a lot of fertiliser subsidy goes here and there and it should not. The entire benefit should be given to the farmer,” Chouhan said at the event.

 

In FY26, urea consumption in India is expected to reach an all-time high of almost 40 million tonnes (MT) driven by increased demand due to higher acreage under maize and rice, as well as its rock-bottom price compared to other fertilisers.

 

As a result of high consumption, recent Budget documents show fertiliser subsidy allocation has risen by 11.05 per cent in the current financial year (FY26) to Rs 186,460 crore from the Budget Estimate (BE) of Rs 167,887 crore due to higher sales.

 

In India, the current cost of production of domestically produced urea is close to Rs 32,000-Rs 35,000 per tonne while the price of imported urea is around Rs 36,000 per tonne (assuming a landed price of $420 per tonne for urea).

 

However, the same is available to farmers at a highly subsidised retail rate of Rs 5,630 per tonne plus GST, price point that has remained static over more than a decade.

 

“I am opening this for debate. People should suggest. Let's make a common agreement and then decide which direction to go,” Chouhan had said.

 

The second major subsidy in which the Centre seems to using digital tools to check pilferage and leakages is food.

 

A few weeks ago, Home Minister Amit Shah launched the first ever Central Bank Digital Currency (CBDC)-based Digital Food Currency pilot in Gujarat. Under the CBDC framework, digital coupons generated through the Reserve Bank of India will be credited directly to beneficiaries as programmable digital currency (e₹).

 

Beneficiaries can redeem their entitled quantity of foodgrains at ration shops using CBDC coupon or voucher codes.

 

Food Minister Pralhad Joshi, also speaking at Business Standard Manthan 2026, said the new system will address challenges related to biometric authentication and e-POS operational issues while ensuring secure, traceable and real-time transactions. The pilot will soon be expanded to the Union Territories of Chandigarh, Puducherry and Dadra and Nagar Haveli,

and Daman and Diu.

 

As per a concept note, the pilots on e-vouchers have been proposed in collaboration with State Bank of India (SBI) as the Issuer Bank and NIC as the technical partner.

 

According to the note, these itemized vouchers will function as purpose-specific, non-monetary digital instruments, representing food entitlements under National Food Security Act now called as the Pradhan Mantri Gareeb Kalyan Ann Yojana (PMGKAY).

 

The vouchers will act as digital currency equivalents, without any cash movement or legal tender properties, redeemable only for specified food commodities (for example 10 kg wheat or 10 kgs of rice).

 

They will be Aadhaar-linked, non-transferable, and valid only for a specific month.

 

Such a voucher will ensure that beneficiaries have direct control of their entitlements and transactions are traceable, verified, and tamper-proof.

 

The concept note, meanwhile, said that despite multiple reforms in PDS such as Aadhaar authentication, electronic Point-of-Sale (ePoS) devices, and the One Nation One Ration Card (ONORC) framework, operational challenges persist at the last mile, with beneficiaries facing issues of under-weighing and poor-quality grains, dealer monopoly that limit beneficiary choice, and manual reporting that allows delayed or inflated dealer claims.

 

There is also limited transparency in real-time beneficiary acknowledgment.

 

“To address these issues, the Department of Food and Public Distribution proposes the integration of NPCl's e-RUPI platform into the PDS ecosystem, in collaboration with SBI as the Issuer Bank and NIC as the technical partner,” the note said.

 

As per the process, first the National Informatics Centre or NIC the NFSA entitlement data monthly, which is then sent to the SBI through the secure APIs for voucher creation through NPCl's e-RUPI platform. Once NPCI generates the unique voucher IDs, it returns them to NIC for delivery to beneficiaries.

 

Thereafter, the beneficiaries receive e-RUPI vouchers via SMS or QR code (through Mera Ration App) which is then stored securely within the NIC system and linked to beneficiary Aadhaar tokens.

 

Once this process is complete, beneficiary presents the same to a Fair Price Shop (SMS/QR). The dealer then scans or enters the voucher ID on the ePoS device, which validates the voucher via NIC to NPCI and finally through to SBI.

 

And, finally, after the biometric/OTP is authenticated and beneficiary approval received the ration is issued is issued to him.

 

To settle the accounts, SBI settles the transaction digitally with the Acquirer Bank and records the corresponding dealer commission as per DFPD policy and all this is reflected in NIC and DFPD dashboards at real-time.

 

Explaining, the benefits of such a system, the concept note said that for the beneficiaries, e-vouchers will ensure direct control over ration redemption, no manipulation by intermediaries and improved trust and transparency and convenience by application or SMS.

 

For the government, the voucher system ensures, tamper proof and auditable transactions, automated reconciliation and settlement, real-time visibility through dashboards and reduced leakages and grievances.

 

The system will have multiple benefits for the partner banks as well that included strengthened presence in government digital payments ecosystem, alignment with RBI digital governance initiatives, enhanced partnership and visibility with Central government and it can also act as pilot for future welfare disbursement models.

 

“This collaboration aims to digitally transform the Public Distribution System through a secure, accountable, and beneficiary-centric model, leveraging India's own fintech infrastructure,” the concept note had said.

 

Though, the concept note does not mention this, but a section of experts has been advocating use of e-vouchers in PDS in place of physical grain distribution through ration shops as an option to check burgeoning food subsidy and check open-ended procurement of grains.

 

The Centre’s 100 per cent digitisation of ration cards and its end-to-end computerisation of the entire PDS distribution value chain already places it on a strong footing to move towards e-vouchers for PDS distribution.