Don’t go for DBT of fertiliser subsidy: Farm bodies to finance minister

 Farmers’ organisations and experts have sought that the government ignore suggestions for ‘direct benefit transfer’ (DBT) of fertiliser subsidy. They have also demanded setting up of a high-level commission to deal with farmers’ issues.

These are parts of multiple suggestions submitted by farm experts and farmer groups to finance minister Nirmala Sitharaman earlier this week as inputs during pre-budget consultations on the agriculture sector.


Their other suggestions are inclusion of tenant farmers and share-croppers under ‘income support scheme’ (PM-Kisan), legislation to ensure income security for farmers, separate skill registry for agri work force, revamping of crop insurance scheme, removal of GST on agri inputs, creating a market intelligence system and registration of actual cultivators.

“A system where subsidy is given in the name of the farmer can objectively be reviewed when farmers’ organisations form a part of the review process. Savings could be in thousands of crores,” Ajay Vir Jakhar of Bharat Krishak Samaj suggested to the ministry while seeking scrapping of the proposal to give fertiliser subsidy through DBT.

Jakhar, who attended the pre-budget meeting on Tuesday, said fertiliser subsidy through DBT would have only one winner — the fertiliser industry. “It is solely designed to transfer the burden of collecting subsidy from the industry to farmers,” he said.

Similar suggestions were forwarded by another farmers’ group, Alliance for Sustainable and Holistic Agriculture (ASHA), which wants a “rethink” on the issue.

“It has serious implementation problems, and once again, actual cultivators including tenants and share-croppers will be left out and the subsidy will instead go to whoever has the ‘patta’ passbook for the land,” said Kavitha Kuruganti of ASHA.

Bharatiya Kisan Sangh (BKS), the farm wing of Rashtriya Swayamsevak Sangh (RSS), is learnt to have suggested in the meeting that there should be zero GST on farm inputs such as fertilisers, seed and agri equipment. It also sought that the ministry ban futures trading in agri commodities, arguing that the current practice did not benefit consumers and farmers.

Since tenant farmers and share-croppers currently miss the benefits under various schemes, including PM-Kisan which allows only landholders to get Rs 6,000 per annum, ASHA sought to highlight their plight. It demanded that the PM-Kisan scheme should include tenant farmers and share-croppers as beneficiaries, and a specific allocation of up to Rs 20,000 crore should be made for it in the next budget. Both ASHA and Bharat Krishak Samaj suggested setting up a high-level statutory farmers’ commission. Demanding that the government announce the constitution of a National Farmers’ Income Commission in its 2020-21 budget, Kuruganti said, “This should be a standing commission backed by a statute, whose mandate would be to assess farmers’ incomes across the country, in different regions under different crops, and to analyse and recommend specific steps that need to be taken to achieve doubling of farm incomes.” Referring to Bharat Krishak Samaj’s suggestion on ‘statutory farmers’ commission’, Jakhar said, “Its mandate must include to review existing interventions, recommend new initiatives, re-purposing of existing subsidies and allocation of resources.”


The Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) scheme has transferred financial benefits to around 7.6 crore farmers till November 30.

Interestingly, more than 20 per cent of the beneficiaries are from Uttar Pradesh.

The Centre had implemented PM-Kisan, an income support scheme for farmers to enable them take care of expenses related to agriculture and allied activities as well as domestic needs, with effect from December 1, 2018.

Launched on February 24, the scheme provides eligible beneficiaries ₹6,000 a year, in three instalments of ₹2,000 each.

In a written reply in the Lok Sabha, Narendra Singh Tomar, Union Minister of Agriculture and Farmer Welfare, had stated that 7.6 crore got the financial benefit under ‘PM-Kisan’ scheme till November 30. His reply had estimated the number of holdings for transfer of benefits at 14 crore till November 30.

In another reply, the Minister gave State-wise break-up of beneficiaries. According to that list, the number of beneficiaries from Uttar Pradesh stood at 1.70 crore, accounting for around 22.37 per cent of total number of beneficiaries. It was followed by Maharashtra at 70.47 lakh (9.26 per cent), and Karnataka at 46.91 lakh (6.16 per cent).

Around 32.81 lakh (4.31 per cent) beneficiaries from the North-East States got the benefit of the scheme till November 30.Of the 7.6 crore beneficiaries, 5.96 crore (78.36 per cent) were from the general category, 92 lakh (12.09 per cent) from the Scheduled Castes (SC) category, and 72.55 lakh (9.53 per cent) were from the Scheduled Tribe (ST) category.

The share of beneficiaries from the ST category stood at 99.59 per cent in Nagaland, 97 per cent in Meghalaya, 95.43 per cent in Mizoram, 84.27 per cent in Manipur, and 52.97 per cent in Tripura.

There was no SC beneficiary in Punjab till November 30.

The Minister said in the reply that ₹75,000 crore wasallocated for the scheme for 2019-20, and around ₹35,000 crore has been disbursed so far.

According to data available on the ‘PM-KISAN Samman Nidhi’ portal, the total number of beneficiaries stood at 8.45 crore (as on December 20). Of this, UP accounted for a major share of 1.92 crore beneficiaries. This was followed by Maharashtra (79.59 lakh), Rajasthan (56.11 lakh), Madhya Pradesh (53.45 lakh), Andhra Pradesh (50.76 lakh) and Bihar (50.45 lakh).

The PM-Kisan as a tool to prop up sagging rural demand, recording of tenancy to help the real cultivators and streamlining of agricultural subsidies could be three important themes for Indian agriculture in 2020.

With the defeat in the Assembly elections in Madhya Pradesh, Rajasthan and Chhattisgarh in December 2018, the Government realised that to win rural votes in the General Elections in May 2019, it needed to do something big and urgently. It found ₹20,000 crore in 2018-19 (Revised Estimate) and PM Kisan was announced in the Interim Budget. An amount of ₹6,000 per annum was to be paid to all small and marginal farmers with retrospective effect from December 2018.

Direct income support to farmers has been under discussion for several years but it was always felt that the country cannot afford it and it can only come in lieu of other subsidies. After the elections, the Government allocated ₹75,000 crore in the 2019-20 and in a wrong decision, extended it to medium and big farmers also.

During December 2018-March 2019, 4.74 crore landholders received the money under PM-Kisan. However, the scheme slowed down a bit and from April to November 2019, with only ₹36,000 crore paid to farmers. In a slowing economy, faster pace of transferring money can help in increasing rural demand. An incidental benefit of PM-Kisan is correction of land records but precise data on progress made has not been made available.

So far, money under PM-Kisan has been given to all land holders and the Government has not differentiated between rain-fed farmers and irrigated farmers or crops procured and not procured. The government can begin with rain-fed areas as they are more deserving than big farmers in irrigated areas.

Subsidies to agriculture in 2013-14 amounted to ₹1.36 lakh crore (at 2011-12 prices). It is known that they are inefficiently utilised. Can the model of PM-Kisan be used to directly transfer existing subsidies on bank interest, electricity, irrigation and fertiliser, etc?

Since money under PM-Kisan has gone to land holders recorded in revenue records, the tenant farmers and actual tillers have been left high and dry. There is no data to show that landlords have shared their income from PM-Kisan or reduced their rentals for tenants.

This is the crux of problem due to which there is no progress on direct benefit transfer (DBT) of urea subsidy (₹57,099 crore in 2019-20). It is feared that DBT of fertiliser subsidy will go to land holders and actual cultivators will find urea at market prices too expensive. This may adversely impact food production. So the correct identification of tenant farmers, who actually cultivate the land (but do not own it), is necessary before DBT of fertiliser can be undertaken.


The Centre has to play a leading role in resolving this long enigma of actual cultivators not getting benefit of agricultural subsidies.

In 2020, the Government would do well to focus on rural economy.

The author was a Union Agriculture Secretary. Now, he is Visiting Senior Fellow, ICRIER.

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