Direct transfer of fertiliser subsidy facing a tough time

The Centre is pushing for an early roll-out of direct transfer of fertiliser subsidy, but officials in the nodal department said the programme might not yield desired results even at the pilot stage unless a proper identification of the end-user is done. 

As part of the direct transfer of fertiliser subsidy, the plan is to transfer the existing subsidy directly to the bank accounts of farmers on a per hectare basis instead of allocating them to the companies. 

This will not only check the leakage, but will also correct the imbalance in usage, which at present is highly skewed in favour of urea. Urea is the cheapest fertiliser available in the country at present.

“Though in-principle the department is in favour of direct cash transfer of fertiliser subsidy, there are many practical difficulties in implementing, which first needs to be addressed before the scheme become a success,” a senior official said. 

He said one such difficulty is in identifying the actual user. In India, large number of farms is on lease and is tiller is separate from the owner. 

“If the subsidy is calculated on a per hectare basis, then there might be situation where the person who owns the land gets all the benefit, while the actual tiller is left out,” the official explained. 

He said there are some views that instead of transferring subsidy to the farmers, it should be given on per bag basis, but that is also not formalized. 

“Unless a mechanism is found to ensure that the subsidy is given to the actual farmer, there will be difficulties in implementing the programme,” the official said.

According to a report of the high-level committee on restructuring of Food Corporation of India (FCI), a direct subsidy of around Rs 7,000 per hectare could be transferred to the farmers, while at the same time urea prices could be deregulated. 

“It may be noted that this type of direct transfer of fertiliser subsidy in cash will go a long way in helping those who take loans from money lenders at exorbitant rates to buy fertiliser,” the report said. 

The 2014-15 Economic Survey suggests dovetailing Jandhan Yojana with Aadhar and mobile platform to transfer subsidies directly in cash as a solution to ensure minimum leakage. 

It says around Rs 3,78,000 crore or around 4.24 per cent of the GDP is annually spent by the Centre in providing subsidized rice, wheat, pulses, sugar, kerosene, LPG, naphtha, water, electricity, diesel, fertiliser, iron ore,  through various schemes and programmes such as the Public Distribution System (PDS), cheap kerosene etc, a big portion of which does not reach the actual beneficiary.