How different is DBT in fertilizers when compared to other DBT schemes of government? What are the challenges of DBT in fertilizers?

The fertilizer subsidy would be given directly to the manufacturer after capturing the Aadhaar number of the farmer through a point-of-sale (PoS) machine on the purchase of fertilizer. An authenticated receipt from the PoS will provide the details of the purchase and subsidy to be paid by the government to the producer.
Direct Benefit Transfer (DBT) for fertilizer subsidy payment is slightly different from the normal DBT process being followed

• The fertilizer subsidy will be released to the fertilizer companies instead of the beneficiaries on the basis of actual sales made by the retailers to the farmers. The direct transfer of the subsidy to the farmers is not feasible as the beneficiaries and their entitlement is not clearly defined.
• Multiple products like urea, Phosphate & Potassium fertilizers have different subsidy rates.
• The subsidy rate also varies from company to company due to different production processes, energy efficiencies of plants, vintage etc
• The amount of subsidy for some fertilizers is huge. It will be a financial burden on the farmers to pay the MRP and subsidy upfront.

Challenges:

• Infrastructure issues: Various components like point of sales machines, Aadhaar authentication needs to work in tandem. Lack of quality digital infrastructure will hinder the smooth working of the system.
• Burden on the retailers who need to constantly upload the transactions. This will find fewer acceptances from them due to increased burden.
• Aadhaar authentication issues. Incidents are reported wherein people are facing authentication using Aadhaar. It may lead to exclusion errors.

With the Introduction of Soil health hard there are numerous prospects for the DBT in fertilizers for enhancing the efficiency of subsidy in fertilizer sector and preventing leakages.

Topics: GS-III: Storage Transport and Marketing of Agricultural Produce Related Issues