Fertilizer Companies to get Subsidy via DBT : GOI

In a reply to a question on progress of and feedback on Direct Benefit Transfer (DBT) system introduced in fertilizer distribution in the country, Minister of State for Planning (IC) and Chemicals & Fertilizers, Shri Rao Inderjit Sing, informed that the Government has introduced Direct Benefit Transfer (DBT) system for fertilizer subsidy in a phase-wise manner across all States/UTs. Under the fertilizer DBT system, 100% subsidy on various fertilizer grades shall be released/is being released to the fertilizer companies, on the basis of actual sales made by the retailers to the beneficiaries. 

The Minister added that the sale of all subsidized fertilizers to farmers/buyers is being made through Point of Sale (PoS) devices installed at each retailer shop and the beneficiaries are being identified through Aadhaar Card, KCC, Voter Identity Card, etc. Implementation of the DBT Scheme requires deployment of PoS devices at every retailer shop, training of retailers & wholesalers for operating PoS device.

Shri Singh informed that across the country, the Lead Fertilizer Supplier (LFS) has conducted 4630 training sessions till date, as a part of ongoing PoS deployment and as a precursor to nation-wide rollout of DBT.  Approximately 1.8 lakh retailers were sensitized during the introductory training sessions conducted by LFS.   

Allaying all misconceptions regarding procedural (Aadhaar) formalities in the DBT system hampering timely distribution of fertilizers in some States, Shri Singh informed that the sale of all subsidised fertilizers to farmers/buyers is being made through Point of Sale (PoS) devices installed at each retailer shop and the beneficiaries are being identified through Aadhaar Card, KCC, Voter Identity Card etc.  In case, any beneficiary is not having Aadhaar Card, he/she is still being sold the fertilizer at subsidized cost on production of Kisan Credit Card or Voter Identity Card, along with his Aadhaar Enrolment number, the Minister added.

Further, replying on the feasibility to introduce DBT system for providing fertilizer subsidy directly to farmers, Shri Singh said that under the DBT scheme, the subsidy will be released to the fertilizer companies, instead of beneficiaries, after the sale is made by the retailers to the beneficiaries.

At present, direct transfer of subsidy to beneficiaries like in LPG cannot be introduced in the fertilizer sector as the beneficiaries and their entitlements are not clearly defined. Multiple subsidized products, urea and 21 grades of Phosphatic & Potassic fertilizers have different subsidy rates.  In the case of urea subsidy varies from company to company due to different production processes, energy efficiencies of plants, vintage etc. Amount of subsidy in some fertilizers particularly Urea is more than double the MRP.  It will be a huge financial burden on the farmers’ pocket, to pay the MRP and subsidy upfront and receive the subsidy amount in his bank account subsequently, the Minister explained. 

However, Niti Aayog has recently set up a committee for in depth analysis of the issue and to recommend a model that could be used for direct transfer of subsidy to the farmers, Shri Singh added.