Need to improve infrastructure to prevent leakage in fertiliser subsidy: Study

Need to improve infrastructure to prevent   leakage in fertiliser subsidy: Study

To cut pilferage in the fertiliser subsidy mechanism, the government must expand infrastructure, issue licences to new retailers and put in place a strong grievance redressal system, according to a study by consulting company .

MicroSave’s study for think-tank Niti Aayog and the department of fertilisers is with regard to the government’s decision that from this kharif season, payment of subsidy to fertiliser companies will be initiated on actual sales to farmers, an agriculture ministry official told ET. Earlier, the process would start once companies produced documents showing dispatch of fertiliser to district headquarters. 

Crop planting in the kharif season is set to begin by May-June. 

Till the last rabi season, on a pilot basis in 16 districts across 11 states, companies were getting subsidy after farmers purchased fertilisers post Aadhar identification. Officials said the target in the coming years will be to ensure direct transfer of subsidy to farmers as is happening in the case of LPG. 

The government’s decision to change the contour of giving fertiliser subsidy to companies on actual sales made to farmers through point of sale (PoS) devices is aimed at streamlining the Rs 70,000-crore annual subsidy it gives to the sector. Currently, farmers get urea and 21 grades of phosphatic and potassic fertilisers at subsidised rates. 

The government also wants to prevent over-invoicing, plug leakages, reduce diversion, ensure that supply chain losses will be the responsibility of the fertiliser company, predict real-time demand and track actual utilisation by farmers. “Our study indicates that the government, however, must clear plans to double retailer commission and proactively consider issuing licences to new retailers to streamline the nationwide launch,” said Mitul Thapliyal, associate director, MicroSave. 

Also, there is need to improve communication and create awareness among farmers and strengthen the grievance redressal mechanism, said Thapliyal. 

According to the agriculture ministry, the fertiliser requirement for this kharif season will be met by the industry. The assessed requirement of urea is 158 lakh tonnes, 49.20 lakh tonnes of DAP, 20.25 lakh tonnes of MOP, 49.73 lakh tonnes of NPK and 26.25 lakh tonnes of SSP. 

“Some other measures which can be taken by the government are—appointment of block agriculture officers as the main contact point for retailers; allowing linkage of Mobile Fertiliser Management System (mFMS) with manufacturer ERPs or Tally, enabling GST calculation in the PoS application; enabling IT infrastructure at rake points and warehouses to update stock immediately; equipping PoS devices to display stock dispatch ID as notification,” he said. 

Before the pan-India rollout, the government had launched pilots in 14 districts across Himachal Pradesh, Bihar, Madhya Pradesh, Haryana, Kerala, Maharashtra, Karnataka, Telangana, Andhra Pradesh, Gujarat, and Rajasthan.

By BOA Bureau