Ministry of fertilizers planning to migrate to cash transfers in three phases

The ministry of fertilizers is mooting the process of providing the subsidies directly to the retailers and customers to make sure that the subsidy is reaching to the targeted population.

This is to increase the cost efficiency and better delivery of the subsidies. Retailers will be given the nutrients based subsidy while the direct cash transfer facility will be extended to the end consumers.

This program is going to be launched in three phases. First phase includes the extension of the integrated software (fertilizer management) system to the licensed retailers.

The fertilizers monitoring system, developed by Lateral Praxis, took 4 months for development and another 3-4 months to fine tune it and convince the stakeholders to adopt the new system.

This system is running under the pilot project in Patna (Bihar) and going to be rolled out throughout the country by September. Second phase is the re-routing of the nutrition based subsidy from company to the registered retailers which is going to be scheduled from June 2012 onward.

Third phase of the program is to provide the direct cash transfer to the end consumers i.e. farmers. This phase is going to be integrated with the Unique Identification (UID) Program to identify the beneficiaries.

The national wide training program for the implementation is going to be commenced from September and going to be rolled out to the entire country by next six months, which seems unrealistic.

The software system, to capture the data for connectivity to the retailers for phase one, is being developed by National informatics Centre (NIC), GOI with the help of Sahara Next (IT arm of Sahara group). This fertilizer management system is going to capture the inventory data from almost 230,000 retailers, attracting higher taxes.

Channeling the nutrients based subsidy from company to the retailers, during second phase of program implementation, is also going to create complications as retailers need to confirm inventory through SMS. The authenticity of data and physical verifications of inventory is going to pose a challenge for govt. agencies.

The third phase, where monetary benefits of subsidy are going to be transferred to the farmers, is the most challenging. 

The identification and verification of beneficiaries is the crucial part of the whole fertilizer management system, so that subsidy system is utilized properly and cost effective way, as there is no congruency of the total size. Another problem is related to the share croppers who are going to be left out under the new scheme.

There are challenges ahead to implement the new system from identifying to convincing beneficiaries, stopping the issuance of fake IDs, streamlining the process with UID systems and providing the timely and accurate subsidy. Government must consider all pros and cons before country wise launch of the new subsidy system with respect to fertilizers.

Read more about: subsidy, farmer
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