Fertilizer Subsidy Current Affairs

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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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