Union Government to introduce Direct Transfer of Fertilizer Subsidy

The Union Government has decided to introduce Direct Benefit Transfer (DBT) system for fertilizer subsidy payments.
Under the proposed system, 100% subsidy on various fertilizer grades will be released to the manufacturers and importers on basis of actual sales made by the retailer to the beneficiaries.
Key facts

• Initially, the modified subsidy procedure under DBT system will be introduced on pilot basis in 16 select districts.
• In the second phase, the new payment system will be rolled out in all states only after its due stabilization in first phase.
• The proposed DBT will address the issues relating to diversion and smuggling of urea.

How DBT system for fertilizer subsidy is different?

• The DBT in fertilizer sector being implemented is slightly different from the normal DBT implemented in LPG subsidy.
• Under it, the subsidy will be released to the fertilizer companies instead of the beneficiaries, after the sale is made by the retailers to the beneficiaries.
• The subsidy will be released on submission of claims generated in the web-based online Integrated Fertilizer Monitoring System (iFMS) by fertilizer companies.

Potential benefits

• It will reduce diversion and smuggling of fertilizers to a large extent. Thus, it will help Government to save subsidy to the some extent.
• The fertilizers will be available to all on ‘no denial’ basis and release fertilizer subsidy to fertilizer companies has no direct relation with landholding of the farmers.

Month: Current Affairs - November, 2016