New Delhi: The Union cabinet on Thursday approved a proposal that will eventually lead to the direct transfer of cash subsidies to farmers for fertilizer, two weeks after it put in place the architecture to enable such a transition.
The step is another sign of the government’s intent to move towards a regime of direct transfer of cash subsidies for all its various programmes in order to ensure that the benefits of such schemes reach the intended targets.
Last month, the government set up a ministerial committee headed by Prime Minister Manmohan Singh
to steer the effort that aims to prune leakages in its delivery of subsidies. Subsidy payments and benefits under different schemes amount to nearly Rs.
3 trillion, roughly 3.5% of the gross domestic product, according to government estimates.
Payment of the fertilizer subsidy to companies will be based on the receipt of delivery by retailers, which will be tracked through the mobile-enabled fertilizer monitoring system (FMS).
“A part of the subsidy will be paid on receipt of fertilizers in the district to the companies,” the government said in a release.
A task force headed by Nandan Nilekani
, chairman of the Unique Identification Authority of India (UIDAI), had proposed transfer of the fertilizer subsidy in a phased manner starting from the retailer to the farmer. The task force was set up to study the feasibility of direct transfer of cash subsidies on fertilizer, cooking gas, kerosene and those in the public distribution system.
In order to examine the feasibility of transferring the subsidy directly at the farmer level, the cabinet also approved a pilot project in 10 districts, which will be started by the end of this year.
“This will also be tracked through ICT (information and communication technology) enabled tools, and identification of the farmers will be done through the Kisan Credit Card, Aadhaar number, bank account number, etc.,” the government said.