Centre has decided to roll out one of its biggest subsidy reforms across the country from June where fertilizer subsidies would be transferred to manufacturers on the basis of actual sales.
This is a move which will pave the way for implementation of the direct benefit transfer (DBT) system in this sector and could save up to INR 7,000 crore by plugging leakages.
Though it will take some more time for the government to directly transfer subsidies to accounts of the end users (farmers), the June roll out will provide the government enough data through point of sale (PoS) machines having Aadhaar-based authentication system at retailers end.
It will aim to achieve its ultimate objective system of transferring benefits to farmers possibly after mid-2018.
The government has budgeted INR 70,000 crore for fertilizer subsidy in the current financial year.
Subsidies are currently paid to fertilizer companies on the basis of receipt of fertilizer at rail rake points or identified godowns in districts.
Once the new system is implemented from June, the manufacturers will get the difference between the actual value and the subsidized price of fertilizer in the companies bank account after giving actual details of sales through the PoS.
It will plug leakages and save huge amount of money to the exchequer.
Sales of neem-coated Urea have already stopped illegal diversion of fertilizer for non-agriculture applications like in plywood and textile sectors or for milk adulteration.
A soil health card scheme launched last year will help in determining the actual need of fertilizer but so far it has achieved only 40% of its target.
