The Commission on Agricultural Prices and Costs (CACP), an advisor to the Indian government on the minimum price support for major agricultural products, recommended for the first time a cash subsidy for fertilizers to farmers in the amount of 5,000 rupees 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 current practice of transferring subsidies to fertilizer companies will be suspended.
Currently, farmers receive urea and P&K fertilizers at subsidized prices in the market. The government improved the form of payment of subsidies to fertilizer companies by changing the subsidy point. They get the subsidy once the fertilizers are sold to farmers through point of sale (PoS) machines with biometric authentication. Before, they used to receive a subsidy by receiving fertilizers at the district level.
“The Commission recommends that the subsidy of approximately Rs 5,000 per year be transferred to all farmers in two installments of Rs 2,500 each at the beginning of the kharif and rabi seasons,” the report said. The Pradhan Mantri Kisan Samaan Nidhi (PM-KISAN) transfers 6,000 rupees per year in three tranches, one for each quarter (four months), to some 90 million registered farmers in the country. If the recommendation passes the test of the council of ministers, the central government led by Narendra Modi will transfer a total of 11,000 rupees to the country’s farmers and land cultivators, which will be closer to the universal basic income.
“It is necessary to switch to DBT (direct benefit transfer) of the fertilizer subsidy so that farmers can make decisions about the use of different nutrients based on the state of the soil nutrients,” said CACP in its pricing policy report. rabi for the 2021 marketing campaign 22.
“Fertilizers will become increasingly important to improve crop yields and since most Indian farmers are small and marginal, it is necessary to continue to subsidize fertilizers,” he said.
The CACP calculation involves two parameters: average subsidy of Rs 4,585 per hectare and average farm size of 1.08 hectare.
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