Barriers to Direct Benefit Transfers for Fertiliser Subsidy

by Arshi Aadil and Ritesh Rautela
Sep 24, 2018
1 min

The Indian government initiated DBT in fertiliser to plug leakages and bring transparency in the system. Direct Benefit Transfer in Fertiliser (DBT-F) in its current form is a modified subsidy payment system, where the government pays subsidy to fertiliser companies only after fertiliser retailers have sold fertiliser to farmers or buyers. The subsidy isn’t directly credited to farmers in their bank accounts owing to certain challenges. This note highlights the major barriers to distributing fertiliser subsidy through cash transfers and in-kind transfers.

Fertiliser subsidy is the second-largest that the Government of India provides after food subsidy of which the budget amounted to INR 700 billion (USD 10.78 billion) in the financial year 2018–19. In the Union Budget 2016–17, the Indian government proposed to bring fertiliser subsidy under the Direct Benefit Transfer (DBT) programme to streamline its distribution. Read our article for more.