New direct transfer scheme in fertilizers could bolster farmer subsidy

The much awaited direct benefit transfer (DBT) scheme in fertilizers will be rolled out on a pilot basis in 16 districts of the country on November 1.  

The scheme will be distinctly different from the existing DBT programmes as it will not result in farmers' paying the actual amount of fertilizer first and then getting the subsidy component deposited by the government in his account later. Instead, the maximum retail price (MRP) of fertilizer will remain the same as it is today. The plan is to transfer the amount of subsidy that is due from a virtual account of the farmer, by the government, on actual transaction basis to the fertilizer company.

In other words, whenever a farmer buys fertilizer at a subsidized price, the subsidy component (which is often the double of what the farmer pays) get deposited by the government to the fertilizer company's account through the farmer's account.

According to officials, the new scheme will authenticate the beneficiary (farmer) through his Aadhaar number, voter ID or Kisan Credit Card, and will link the digital land records to identify the precise area where the subsidized fertilizer is meant to be used. Since the scheme runs parallel to the Central government's soil health card programme, the districts where the fertilizer DBT programmes are piloted will also see farmers getting tailor made advices on optimal quantity of fertilizers that they need to apply in the land that has been tagged to the farmer in the official records. While the farmers are free to ignore this advice, it will help the government track unusually high quantity of fertilizer purchases by any individual or on behalf of any specific farm land.

The pilot project, once successful, could be one of the biggest reforms in subsidy disbursement as it will link the DBT  platform for fertilizers to the farm land, the health of its soil and the Aadhaar linked identity of the land owner and tenant.

The states where the pilot schemes will begin initially include Bihar, West Bengal, Madhya Pradesh, Haryana, Andhra Pradesh and Maharashtra.