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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.

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Aadhaar card must for LPG subsidy after November 2016

The Union Government has made Aadhaar card mandatory for availing cooking gas (LPG) subsidies after November 2016.

In this regard, the Union Petroleum Ministry has asked Oil marketing companies (OMCs) to facilitate enrollments of Aadhaar of the consumers to avail the subsidy.

Currently, the government gives 12 LPG cylinders at subsidised rates per household in a year. The subsidy on every LPG cylinder is transferred directly into bank accounts of individuals who then buy the cooking fuel at market rates.

Why there is need of Compulsory Aadhar?

The LPG subsidy is an expenditure incurred from Consolidated Fund of India. The use of Aadhaar as identifier for delivery of government services/subsidies/ benefits will simplifies the delivery processes of government. It will also bring in transparency and efficiency in the delivery processes by plugging leakages and enable beneficiaries to get their entitlements from Government directly to them without any middlemen.

About Aadhaar

Aadhaar is a 12-digit unique number which acts as a proof of identity and address anywhere in the country. It is considered as the world’s largest national identification project. Its objective is to collect the biometric and demographic data of residents, store them in a centralised database. The unique number is issued by the Unique Identification Authority of India (UIDAI).

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Jharkhand becomes first state to implement DBT in Kerosene

Jharkhand has become the first state in the country to implement Direct Benefit Transfer (DBT) in Kerosene Scheme.

The scheme is being implemented in four identified districts of the state from 1st of October 2017. These districts are Chatra, Hazaribagh, Khunti and Jamtara.

About Direct Benefit Transfer in Kerosene (DBTK) scheme

  • Under the DBTK scheme, PDS kerosene will be sold at non-subsidised price and the subsidy will be directly transferred to consumers directly into their bank accounts.
  • This initiative was launched by Union Petroleum and Natural Gas Ministry on the lines of a similar DBT programme for LPG subsidy.
  • It aims at rationalising subsidy based on the approach to cut subsidy leakages but not the subsidy.
  • It will give priority to eliminate subsidized Kerosene from supply chain for better targeting of beneficiaries.
  • It also seeks to eliminate pilferage and black-marketing and cut down adulteration of the Kerosene, a cheap cooking and lighting fuel with diesel.

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