Disbursal of direct subsidy to farmers and fertiliser retailers will soon be a reality.
The Government will do a nationwide roll out of mobile-based Fertiliser Management Systems (mFMS) this year to track the movement of fertilisers and subsidies, from the manufacturer to retail level.
This follows the recommendations of the task force headed by Mr Nandan Nilekani on IT strategy for direct transfer of subsidy.
“Direct transfer of subsidy to the retailer and eventually to the farmer will be implemented in subsequent phases. This step will benefit 12 crore farmer families, while reducing expenditure on subsidies by curtailing misuse of fertilisers,” the Finance Minister, Mr Pranab Mukherjee, said.
In a bid to reduce import dependency, the Government is taking various steps to finalise pricing and investment policies for urea. “With the implementation of new investment policy, the country will become self sufficient in urea manufacturing over the next five years,” Mr Mukherjee said.
The domestic urea production is around 22 million tonnes, while consumption is pegged at 29 million tonnes, resulting in a shortfall of 7 million tonnes. No new capacity has been added in the past 13 years due to lack of appropriate policy framework. Industry estimates the shortfall to touch 10 million tonnes by end of 12th Plan in 2016-17.
In the case of potassic-phosphatic (P&K) fertilisers, the use of single super phosphate (SSP), which is domestically manufactured, will be encouraged through greater extension work, the Finance Minister said. The basic customs duty on import of equipment for initial setting up or substantial expansion of fertiliser projects are being fully exempted for a period of three years. Earlier, the imports attracted a 5 per cent basic customs duty.
The Budget has also reduced basic customs duty to 5 per cent from 7.5 per cent on some water soluble fertilisers and from 5 per cent to 2.5 per cent on liquid fertilisers other than urea.