DBT of fertilizer subsidy to make farm sector planning more effective

DBT of fertilizer subsidy to make farm sector planning more effective
The agriculture ministry will implement direct benefit transfer (DBT) of fertilizer subsidy in the 14 remaining states from 1 January 2018
As the government rolls out direct benefit transfer (DBT) for fertilizer subsidies, one of the largest subsidy reforms currently underway, the massive amount of data being generated is expected to provide a clear picture of farming activity in the country and help make future planning for the sector more effective.

The government is keeping subsidy reform in the fertilizer sector low key for the complexities involved. The complexities include improper land records, and the involvement of a large number of tenant farmers.

With DBT on fertilizers implemented in all but 14 states, the government has already noticed a close to 10% reduction in subsidy requirement in certain states, fewer instances of retailers overcharging farmers, better transaction times and a reduction in diversion of subsidized fertilizers to other countries for sale at market prices, a person with knowledge of the scheme’s implementation said on condition of anonymity.

The linking of Aadhaar, a 12-digit biometric identification number issued by the Unique Identification Authority of India (UIDAI), with soil health cards and land records wherever possible, is helping policymakers get a better picture of the farming activity in the country.

The data helps in suggesting which crop can be grown where in what season for optimum productivity, based on soil health profile. The software system linked to the point of sale (PoS) machines deployed by the retailers also suggest the best combination of fertilizers needed. At present, farmers have the choice of going by the system’s suggestion or make their own choices.

Once the system functions fully, it will lead to better soil health management, balanced fertilization, and better productivity, besides increasing transparency. Earlier, officials could only be aware that fertilizer supplies had reached a particular district and not whether they had reached the farmer. With Aadhaar linkage, policy makers would know if a farmer has got the plant nutrient.

“This will also stop any leakage that might be happening in the system. A minimum 5-10% saving in consumption and as a result, saving in subsidy, is expected,” said the person mentioned above.

This is significant considering that fertilizer subsidy of Rs70,000 crore was originally allocated for the current fiscal.Fourteen states including Kerala, Bihar, Karnataka, West Bengal, J&K, Jharkhand, Telangana, Odisha, Gujarat and Himachal Pradesh will switch to DBT on fertilizers by 1 January, according to the implementation plan.

The agriculture ministry is on target to provide soil health cards for all 120 million farm holdings by the end of this year. According to the ministry, use of these cards have led to 8-10% lower consumption of fertilizers in 2016-17 compared to the year before, while due to balanced use of nutrients overall crop production went up by up to 12%. In addition to rolling out DBT in disbursal of fertilizer subsidies, the centre in early 2015 initiated 100% neem coating of urea to prevent industrial use and smuggling.