Govt eyes direct transfer of fertilizer subsidy

  1. The government has been preparing to move on a proposal for direct cash transfer(DBT) of fertilizer subsidy amount to farmers bank accounts.
  2. This proposal is aimed at disincentivizing farmers from excessive use of chemical fertilizers.
  3. The funds transferred will be used only for buying soil nutrients while two options are being explored to decide the cash subsidy (a)fixing the amount per acre/hectare or (b)lumpsum amount for all identified beneficiaries on the lines of PM-Kisan scheme.
  4. Currently,farmers are allowed to buy as much fertilizer as they want at a subsidised rate and it is based on a no denying policy.The government directly pays the subsidy amount to manufacturers or marketing firms. This has led to excess use of chemical fertilizers.
  5. Hence,direct payments to farmers are seen as better to ensure delivery of subsidies to the end-user.This will lead to (a)farmers using fertilizer judiciously (b)will help in the health of farmland and (c)Government expenditure on subsidy will also reduce due to less usage.
  6. Further,some other options are also being considered for subsidy transfer.The first option is government can open virtual accounts and these can be operated once the beneficiary enters a security code in the system for buying fertilizer.
  7. The second option is that an e-wallet will be created in the bank account of every beneficiary and the amount transferred for fertilizer subsidy will be kept in this and can be used only for buying fertilizer.
  8. However,there are few problems which needed to be dealt with such as (a)Some states have not yet joined the PM-Kisan scheme and (b)It might also be difficult to have uniform norms for both irrigated and non-irrigated land.