The government is pushing for direct cash transfer (DBT) as fertiliser subsidy, but a study commissioned by NITI Aayog shows that almost 64 per cent of farmers don’t prefer that because of financial burden.
Almost 93.5 per cent of farmers purchase fertilisers in cash. The survey showed that they would incur an upfront expenditure of more than Rs 900 for a 45-kilogram bag of urea, up from Rs 245 a bag, if prices are decontrolled and the subsidy incurred is directly transferred into their banks accounts instead of being routed through companies.
The survey showed that almost 76 per cent of farmers prefer the current form of DBT being used just to identify beneficiaries.
The survey was conducted among 11,289 farmers between July and October 2018, and it was fourth in a series done by MicroSave Consulting for the government. It was MicroSave's first pan-India study.
The survey found that in peak fertiliser sale season almost 60 per cent retailers had difficulty in managing business because of which they sold the product manually and adjusted the transactions in the Point of Sale (PoS) machines later.
Farmers, under the current form of DBT, have to identify themselves through their Aadhaar number in PoS machines installed with retailers for every bag purchased, triggering a process of subsidy disbursement for fertiliser manufacturers.
The survey found that to tide over the difficulties in Aadhaar-enabled authentication, retailers adopted innovative ways like selling manually and adjusting the sale later or selling them the bag in cash and asking farmers to come later for authentication.
“The current DBT process in fertiliser does not fully address the problem of leakages fully as there was no check on the number of bags that each farmer can purchase, but it does provide a trail to the transactions through which if anyone buys excess bags he can be traced,” said Mitul Thapliyal, partner and leader for government and social impact at MicroSave Consulting.
As of 2018 just around 13 per cent of the total transactions done in fertiliser retail shop was without Aadhaar, which was around 60 per cent during the first round of survey done by MicroSave in 2016 in just two districts of Andhra Pradesh.
“DBT in cash for fertilisers should be given some time before it is rolled out and any undue haste might have a big impact,” Thapliyal said.
Despite all the bottleneck, the survey found that government has saved $1.54 billion (about Rs 10,800 crore) in the first year of implementation of the DBT scheme for fertilisers.