Central Government approved for implementation of Direct Benefit Transfer (DBT) for fertilizer subsidy

  • The Central Government has given it approval for implementation of Direct Benefit Transfer (DBT) for disbursement of fertilizer subsidy. The decision was taken by the Cabinet Committee on Economic Affairs, chaired by  Prime Minister Shri Narendra Modi on March 14, 2018.
  • The Cabinet committee also approved to continue Urea Subsidy Scheme from 2017 upto 2020 (beyond 12th Five Year Plan) at a total estimated cost of Rs. 1,64,935 crore. 
  • The continuation of the urea subsidy scheme will ensure that adequate quantity of urea is made available to the farmers at statutory controlled price whereas implementation of DBT in Fertilizer Sector will reduce diversion and plug the leakages. 
  • DBT in fertilizer: According to the government, Department of Fertilizers is in process to roll out DBT in fertilizer sector nationwide. DBT would entail 100% payment to fertilizer companies on sale of fertilizers to farmers at subsidized rates. Therefore, continuation of Urea Subsidy Scheme will facilitate the smooth implementation of DBT scheme in Fertilizer Sector.
  • Urea Subsidy: Urea Subsidy is a part of Central Sector Scheme of Department of Fertilizers with effect from 1stApril, 2017 and is wholly financed by the Government of India through Budgetary Support.
  • The government said that the continuation of Urea Subsidy Scheme will ensure the timely payment of subsidy to the urea manufacturers resulting in timely availability of urea to farmers.
  • Urea subsidy also includes Imported Urea subsidy which is directed towards import to bridge the gap between assessed demand and indigenous production of urea in the country. It also includes freight subsidy for movement of urea across the country.
  • Role of Chemical Fertilizers: Chemical Fertilizers have played an important role in making the country self-reliant in food grain production and provide a very vital input for the growth of Indian agriculture. For sustained agricultural growth and to promote balanced nutrient application, urea is made available to farmers at statutorily controlled price, which at present is Rs. 5360/- per MT (exclusive of the Central/State Tax & other charges towards neem coating). The difference between the delivered cost of fertilizers at farm gate and MRP payable by the farmer is given as subsidy to the fertilizer manufacturer/importer by the Government of India. 
  • 31 urea manufacturing units: At present, there are 31 urea manufacturing units, out of which 28 urea units use Natural Gas (using domestic gas/LNG/CBM) as feedstock/ fuel and remaining 3 urea units use Naphtha as feedstock/fuel.

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