DBT in fertiliser

UPSC

1. DBT in Fertiliser Subsidy – From Pilot to Success By Vishnu Agarwal

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3. Introduction Nitrogen (N), Potash (K), Phosphorous (P), Calcium (Ca), Magnesium (Mg) and Sulphur(S) are macronutrient of the soil . Fertilizers are used to reduce their deficiency . Farmers find it unaffordable to pay the market price for the fertilizers, thus government gives subsidy for it. Fertiliser subsidy is the 2nd largest component of the total subsidy after food subsidy. The government estimated Rs 79,996 crore in fertilizer subsidy this year budget.

4. How the system has changed?

5. Other Features of New system The farmer or buyer’s identity is authenticated either through Aadhar based biometric authentication or Voter ID Card or Kisan Credit Card .  Aadhar based biometric authentication is preferred as this is linked to land records and the soil health card of the farmer. The sale of fertilizers would initially be on a “no denial mode”. All the Fertilizer sale transactions are captured online in the Integrated Fertilizer Management System ( iFMS ) system on real time basis. The claims will be processed on weekly basis and subsidy will be remitted to the company’s bank account through electronic mode .

6. Implementation Pilot project started initially with 17 districts in different states and gradually implemented to whole country. “Project Monitoring Cell” - to oversee implementation of DBT exclusively.  24 State Coordinators - to monitor the on-going DBT activities. Dedicated 15-member Multi-lingual Help Desk - to quickly respond to all typed of queries. Organising about  4,500 training sessions  across India.

7. Success of Pilot NITI Aayog findings: Increased Aadhaar authentication strike rate i.e. more than 99%. Transaction time improved: to less than 3 minutes for 51% and between 3-5 minutes for 33% of the respondents. Grievance redress mechanism has improved; and Alleged instances of overcharging by retailers have come down.

8. Benefits Expected Making transaction digital: Increased transparency. Beneficiary (farmer) driven subsidy mechanism. Aadhaar seeded database: detecting ‘Ghost beneficiary’. Minimizing illegal diversion of fertilizer for non-agriculture applications. Better soil health management: Appropriate mix of fertilizers compatible to the soil health profile of the agricultural land.

9. Quick subsidy payments to Companies. It will plug leakages and save huge amount of money to the exchequer . Generating data on the usage of the nutrients. Through this, the right Use Ratio (like 4:2:1 for NPK) can be implemented. This will automatically cover all small and marginal farmers .

10. How DBT in Fertiliser is different from other types of DBT? DBT in MGNREGA: Payment of wages directly to beneficiaries’ bank account. DBT in PAHAL: Consumers receive LPG subsidy for 12 cylinders a year in their bank account. People earning more than Rs.10 lakh a year would not be eligible for the LPG subsidy. DBT in Kerosene: Beneficiaries purchase kerosene and subsidy is transferred directly to their bank account. DBT in Fertiliser: The fertilizer subsidy will be released to the fertilizer companies instead of Farmers.

11. Why Subsidy is not directly transferred to Farmers Bank Account? Many farmers lack capacity to pay large amounts upfront . Difficulty in calculating the amount of subsidy: Exact amount of subsidy required by farmers. Cost of production for Urea is different for each fertiliser company. Case of DBT in Kerosene: Misuse of Kerosene like it is used to adulterate diesel; Poor Banking system in rural areas; All farmers do not have banking account; Possibility of misuse of cash.

12. Issues with New System Issues such as biometric mismatch (like fingerprints), authentication failure, server downtime and power and internet connectivity . Around 60% retailers reported issues while serving customers during the peak season . Dealer attrition: Due to declining margins; requirement of higher working capital and more staff etc. Different subsidy rate for each company . Companies claimed that payment of subsidies is not timely .

13. Way Forward Improve the quality PoS machines with long term battery. Supply of gloves along with fertiliser bags – for better fingerprint authentication and to protect skin of farmers. Creating awareness among farmers: Use of local languages, user friendly videos etc. Reducing the waiting time especially during peak season. Subsidy directly to the bank account. Sustainable Agriculture and Organic Farming: Over usage of fertilizer is a bigger challenge than subsidy.

14. Fertiliser DBT 2.0 It targets transfer of fertiliser subsidy directly to farmers' bank accounts. For this, 3 steps have been initiated on 10 July, 2019: a dashboard with details of fertiliser supply, availability and requirement at national, state and district level; advanced version of point of sale ( PoS ) software, a multi-lingual facility with a provision for Aadhar virtual identification option; and a desktop PoS version.

15. Thank You