Ending years of dithering, the Centre could lastly shift to the direct profit switch (DBT) for delivering fertiliser subsidy to farmers efficient FY22.
The division of fertilisers and the ministry of agriculture are understanding the small print of the DBT scheme, which can be introduced within the Budget for FY22, sources informed FE.
According to an estimate by the fertiliser division, on a mean, a lump sum of Rs 5,000-6,000 is required to be transferred to every farmer yearly as fertiliser subsidy. This could be along with revenue help of Rs 6,000 yearly being given to farmers below PM-KISAN.
The Centre’s annual subsidy on fertilisers is just a little over Rs 70,000 crore. Over 14.6 crore farmers with common farm dimension of 1.08 hectare are the meant beneficiaries.
Besides higher focusing on of the subsidy to farmers with small land holdings, who’re seen benefiting much less within the present regime, the lump sum cash would discourage rampant/unscientific use of fertiliser by giant farmers and scale back pilferage, the sources added.
Subsidy part was fastened for P&Ok fertilisers efficient April 2010 and this has resulted in subsidies on these fertilisers declining from Rs 41,500 crore in FY11 to Rs 26,369 crore in FY20. Urea subsidy within the interval, nevertheless, elevated from Rs 24,337 crore to Rs 54,755 crore.
While the manufacturing price of gas-based urea is about Rs 900/45 kg bag, the farmers get it for Rs 242, at a reduction of over 70%.
Earlier, the fertiliser ministry was contemplating to introduce a system below which a farmer would have paid the market worth upfront and promptly acquired the subsidy quantity in his/her Aadhaar-linked checking account. This thought was later junked resulting from considerations that farmers with small holdings would possibly discover it tough to make the upfront full cost.
Currently, the federal government releases subsidy quantity to fertiliser manufactures periodically, based mostly on Aadhaar-authenticated gross sales by way of level of sale (PoS) machines, which was rolled out from April 1, 2018, within the first part of DBT.
In the stimulus 3.zero introduced on November 12, the Centre has made an additional provision of Rs 65,000 crore for fertiliser subsidy for FY21, over and above Rs 71,309 crore budgeted. This will be certain that complete subsidy dues to the fertiliser firms, together with `48,000 crore arrears, might be cleared within the present fiscal.
This is an unprecedented step, as a serious a part of subsidy for any 12 months was once launched within the subsequent 12 months/s, resulting in liquidity issues for the fertiliser business and lack of fertilisers in lots of elements of the nation. Given the agitation over the farm Bills, and the truth that the agriculture sector is proving to be silver lining on the cloud of financial droop, the federal government can’t afford paucity of fertilisers within the rabi season.
According to Nabard, there’s a normal tendency on the a part of farmers to resort to overuse of fertilisers and pesticides anticipating greater yields, resulting in pointless rise in enter prices. To tackle this downside, the Centre has began the initiative of issuing soil well being playing cards in order that the farmer can stability the appliance of micro vitamins, different fertilisers and pesticides.
Unlike home cooking gasoline (LPG-Pahal) and meals, the place beneficiaries are outlined and money/type given on to the beneficiary, fertiliser subsidy is common in nature and subsidy quantity is paid to the producer.
Harnessing the facility of Jan Dhan, Aadhaar and Mobile (JAM), DBT in LPG-Pahal has led to saving of Rs 71,301 crore between FY15 and FY20 whereas DBT in meals has cumulatively saved the exchequer Rs 66,897 crore (largely DBT-in-kind as money switch not absolutely rolled out as a result of National Food Security Act and considerations that it may result in deprivation). The PoS system helped the Centre save Rs 10,000 crore in fertiliser subsidy by plugging leakages as much as FY20, official information confirmed.