What are the findings of the Niti Aayog study on new direct benefit scheme for fertilizers?

Under the new scheme, the subsidy on various fertilizer grades is released to the fertilizer companies, on the basis of actual sales made by the retailers to the beneficiaries.

Niti Aayog Study of the DBT Scheme

Preference of Farmers

• The scheme was preferred by 76.5% of farmers surveyed nationwide whereas 18.7% of farmers preferred the earlier system citing issues such as fingerprint mismatch, longer transaction/ waiting time and server connectivity.
• Under DBT, a farmer buying subsidised fertilisers has to provide his/her Aadhaar, voter identification or Kisan credit card (KCC) number.

Mode of Authentication

• About 79.8% of fertiliser sale transactions happened through Aadhaar authentication and another 6.4% based on furnishing of voter ID or KCC number.
• In the remaining 13.8% transactions wherein farmers couldn’t provide their Aadhaar details or the PoS machines were non-functional due to connectivity problems, the retailers resorted to manual transactions.
• Even in case of non-manual transactions, there were many instances of sales made to multiple farmers using a single Aadhaar authentication. Such adjustments were resorted to especially during the peak season, where retailers had to service several customers at any given time. They, then, “managed” sales through multiple PoS transactions against one Aadhaar number or by asking farmers to purchase manually and do the biometric authentication later.
• The average transaction time, from the farmer giving his Aadhaar/election ID/KCC number to getting a printed receipt, was 3-4 minutes.

Direct Cash Transfer

• Only 36.4% of farmers covered in the study favoured direct cash transfers (DCT) .i.e. buying fertiliser at market rates and then receiving money from the government in their bank accounts.
• The balance 63.6% farmers wanted the existing mechanism, of fertiliser being retailed at below-market price and the government paying subsidy to companies, to continue.
• The underlying reason for such a trend was the belief that paying market price for fertilizers upfront would result in an additional financial burden.

The preference to DBT over the cash transfer scheme may not go well with the government which is working on a proposal to pay fertiliser subsidy directly to farmers by giving this in advance, thereby saving them the burden of paying the un-subsidised rates upfront through e-wallets.

Topics: GS-III: Indian Economy Issues Relating to Planning