Govt panel suggests cash fertiliser subsidy of Rs 5,000 per year per farmer

 The Commission for Agricultural Costs and Prices (CACP), the Indian government’s advisor on minimum support price for major farm products, has for the first time recommended a cash fertiliser subsidy to farmers to the tune of Rs 5,000 per year. The panel has suggested that this should be done in two tranches of Rs 2,500 each — in the kharif and rabi seasons. If the government accepts this recommendation, the ongoing practice of transferring subsidy to fertiliser producing companies will be discontinued.

Currently, farmers receive urea as well as P&K fertilisers at subsidised prices in the market. The government improved the way of subsidy payment to fertiliser companies by changing the point of subsidy. They get the subsidy once fertilisers are sold to farmers through point of sale (PoS) machines with biometric authentication. Earlier, they used to receive subsidy on receipt of fertilisers at the district level.

“The Commission recommends that subsidy of about Rs 5,000 per year should be transferred to all farmers in two instalments of Rs 2,500 each at the beginning of kharif and rabi seasons,” the report said. The Pradhan Mantri Kisan Samaan Nidhi (PM-KISAN) transfers Rs 6,000 per year in three tranches, one each for one trimester (four months), to about 90 million registered farmers in the country. If the recommendation passes the test of the council of ministers, the Narendra Modi-led central government will transfer a total of Rs 11,000 to farmers and land tillers in the country — that will be closer to the universal basic income.

"There is a need to shift to DBT (direct benefits transfer) of fertiliser subsidy so that farmers can make choices about the use of different nutrients based on soil nutrient status,” the CACP said in its rabi price policy report for marketing year 2021-22.

"Fertilisers will be increasingly important to improve crop yields and as majority of Indian farmers are small and marginal, there is a need to continue subsidising fertilisers,” it said.

The calculation by CACP involves two parameters: Average subsidy of Rs 4,585 per hectare, and average farm size of 1.08 hectare.