Fertilizer Subsidy Scheme 2021: Department of fertilisers and Ministry of agriculture are planning to launch DBT Scheme in Fertilizer Subsidy, which may be announced in the Budget for FY 2022. Currently, the central government releases subsidy amount to fertiliser manufactures periodically. The amount given is based on Aadhaar-authenticated sales via point of sale (PoS) machines, which was rolled out from April 1, 2018 in the first phase of DBT.
Fertilizer Subsidy Scheme 2021
Ending years of dithering, the Centre may finally shift to the direct benefit transfer (DBT) for delivering fertiliser subsidy to farmers effective from FY 2022. As per the estimate by fertilizer department, on an average, a lumpsum of Rs. 5000 to Rs. 6000 is required to be transferred to each farmer annually as fertilizer subsidy. This amount would be in addition to Rs. 6000 under PM Kisan Samman Nidhi Yojana.
Who are Intended Beneficiaries of DBT Scheme for Fertilizer Subsidy
The Centre’s annual subsidy on fertilisers is a little over Rs 70,000 crore. Over 14.6 crore farmers with average farm size of 1.08 hectare are the intended beneficiaries. Besides better targeting of the subsidy to farmers with small land holdings, who are seen benefiting less in the current regime, the lump sum money would discourage rampant/unscientific use of fertiliser by large farmers and reduce pilferage.
Subsequently, this fertilizer subsidy scheme will provide direct benefit transfer of fertilizer subsidy to farmers. Accordingly, this dbt in fertilizers will ensure direct urea subsidy transfer and fertilizer subsidy directly to farmers. Moreover, govt. will provide dbt for fertilisers to assure supply of subsidized urea under fertilizer dbt rollout. Cabinet Committee on Economic Affairs (CCEA) has approved this proposal for fertilizer subsidy reforms. The primary focus of govt. is on making dbt in fertilisers work and to provide adequate quantity of urea to farmers at low prices.
Urea Subsidy Scheme 2021 for Farmers
Subsidy component was fixed for P&K fertilisers effective 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 in the period, however, increased from Rs. 24,337 crore to Rs. 54,755 crore. While the production cost of gas-based urea is about Rs. 900 per 45 kg bag, the farmers get it for Rs 242, at a discount of over 70%.
Earlier, the fertiliser ministry was considering to introduce a system under which a farmer would have paid the market price upfront and promptly received the subsidy amount in his/her Aadhaar-linked bank account. This idea was later junked due to concerns that farmers with small holdings might find it difficult to make the upfront full payment. Currently, the government releases subsidy amount to fertiliser manufactures periodically, based on Aadhaar-authenticated sales via point of sale (PoS) machines, which was rolled out from April 1, 2018, in the first phase of DBT.
Fertilizer Subsidy Scheme in Atmanirbhar Bharat 3.0 Package
In the Atmanirbhar Bharat Yojana 3.0 announced on 12 November 2020, the Centre has made an extra provision of Rs. 65,000 crore for fertiliser subsidy scheme for FY 2021. This is over and above Rs. 71,309 crore budgeted. This will ensure that entire subsidy dues to the fertiliser companies, including 48,000 crore arrears, will be cleared in the current fiscal.
This is an unprecedented step, as a major part of subsidy for any year used to be released in the subsequent year/s, leading to liquidity problems for the fertiliser industry and shortage of fertilisers in many parts of the country. Given the agitation over the farm Bills, and the fact that the agriculture sector is proving to be silver lining on the cloud of economic slump, the government can’t afford paucity of fertilisers in the rabi season.
Soil Health Card to Prevent Overuse of Fertilizers and Pesticides
According to Nabard, there is a general tendency on the part of farmers to resort to overuse of fertilisers and pesticides expecting higher yields, leading to unnecessary rise in input costs. To address this problem, the Centre has started the initiative of issuing soil health cards so that the farmer can balance the application of micro nutrients, other fertilisers and pesticides. Unlike domestic cooking gas (LPG-Pahal) and food, where beneficiaries are defined and cash/kind given directly to the beneficiary, fertiliser subsidy is universal in nature and subsidy amount is paid to the manufacturer.
Harnessing the power of Jan Dhan, Aadhaar and Mobile (JAM), DBT in LPG-Pahal has led to saving of Rs. 71,301 crore between FY15 and FY20 while DBT in food has cumulatively saved the exchequer Rs 66,897 crore (largely DBT-in-kind as cash transfer not fully rolled out due to the National Food Security Act and concerns that it could lead to deprivation). The PoS system helped the Centre save Rs 10,000 crore in fertiliser subsidy by plugging leakages up to FY20, official data showed.
To see more details, visit the official website of Department of Fertilizers at
Benefits of Urea Subsidy Scheme / DBT in Fertilizer Subsidy to Farmers
The important features and highlights of this direct benefit transfer of fertilizer subsidy are as follows:-
- Direct Transfer in Fertilizer Subsidy Scheme will enable farmers to purchase urea at subsidized price.
- CCEA approves implementation of Direct Benefit Transfer – DBT Scheme in fertilizer subsidy to properly disburse fertilizer subsidy directly to farmers.
- This direct benefit transfer in fertilizer subsidy scheme will reduce diversion and also plug the leakages.
- Govt. is planning for nationwide fertilizer DBT Scheme rollout to provide direct benefit transfer for fertilisers.
- DBT in fertilizers will ensure 100% payment to fertilizers companies for making DBT in fertilisers work under fertilizer DBT scheme.
This continuation of Urea Subsidy Scheme will bring fertilizer subsidy reforms to ensure supply of fertilizer subsidy to farmers.
Source / Reference Link: https://www.financialexpress.com/economy/dbt-scheme-for-fertiliser-subsidy-may-be-rolled-out-in-fy22/2174500/#:~:text=In%20the%20stimulus%203.0%20announced,cleared%20in%20the%20current%20fiscal.