Enablers For Direct Benefit Transfers Of Fertiliser Subsidy
Over the past few years, there was a continuous effort by the government to streamline the in-kind distribution of fertiliser. Targeting fertiliser subsidies directly to farmers would be a herculean task, but can be attempted by combining several initiatives that the central government and some state governments have undertaken over the past years. This note discusses potential solutions to improve in-kind transfers and suggests few ideas for cash transfer pilots for fertiliser subsidy.
Barriers to Direct Benefit Transfers for Fertiliser Subsidy
The Indian government initiated DBT in fertiliser to plug leakages and bring transparency in the system. Direct Benefit Transfer in Fertiliser (DBT-F) in its current form is a modified subsidy payment system, where the government pays subsidy to fertiliser companies only after fertiliser retailers have sold fertiliser to farmers or buyers. The subsidy isn’t directly credited to farmers in their bank accounts owing to certain challenges. This note highlights the major barriers to distributing fertiliser subsidy through cash transfers and in-kind transfers.