The Union government has dismissed a NITI Aayog study which says that 63.6% of farmers surveyed would not prefer direct cash transfer (DCT) in fertiliser subsidies. The government dismissed the survey in response to a question raised by Hyderabad MP Asaduddin Owaisi in the Lok Sabha. The survey sanctioned by the NITI Aayog found that farmers feared the DCT scheme would likely increase their financial burden, as they have to buy fertilisers at market price, thus increasing their dependence on informal money lenders.
Under the DCT scheme for fertilisers, the farmers have to pay market price to buy fertilisers. The subsidy gets credited to their registered bank accounts later. Previously, the farmers would buy fertilisers at a subsidised rate, where the cost of the subsidy is borne by the fertiliser companies, and the Union government later pays the subsidy amount to the companies. By December 2018, according to the Union government’s own admission in the Rajya Sabha, the fertiliser subsidy arrears owed by the government to the fertiliser companies had touched around Rs 23,284 crore.
In response to the question raised by Owaisi, the Minister for Chemicals and Fertilisers, DV Sandananda Gowda, on Tuesday said, “The study by Microsave is a sample study, which is not a comprehensive one covering the adequate number of potential beneficiaries. Hence, not much reliance can be placed on this finding.” The consulting firm Microsave appointed by NITI Aayog had pointed out that only 36.4% of the farmers surveyed would prefer DCT in fertiliser subsidy. The agency was tasked to do the ground survey for DCT, as part of the rollout of Direct Benefit Transfer (DBT) schemes of the government.
Those working closely with farmers say the DCT scheme is being pushed without any discussion with farmers, and without taking into account how DCT would impact tenant farmers who do not hold the rights to the land they farm on.
“When you convert subsidies to DCTs, then the people who own the land will be getting the cash, and there is no way the people who till the land get this cash,” points out Kiran Vissa from the Rythu Swaraj Vedika, which works on farmer issues. Pointing to the Telangana government’s Rythu Bandhu Scheme as an example, he says that in the state, land-owning farmers are paid Rs 10,000 per acre annually, whereas the tenant farmers have been left out of the scheme.
“The Union government is pushing for DCT due to an ideological position. Basically, the debate is that DCT is the way forward so that you don't distort the market (with subsidies) for the rest of the economy,” added Kiran.
The Microsave survey findings which the Union government is downplaying, says, “Farmers believed that their financial burden would increase if they had to buy fertiliser at the market price, as they would be forced to borrow additional money to compensate for the perceived increase in the price of fertiliser. The survey cited an example, where a farmer who buys 25 bags of subsidised urea annually at the rate of Rs 266 per bag will only need Rs 6,650, but under the DCT scheme would instead require Rs 27,500 for the same amount of urea bags if bought at the market rate of Rs 1,100.”
The survey also says, “Under DCT, farmers noted that they would pay more interest on the increased amount borrowed. The interest burden would be more difficult for farmers who borrow from informal financial sources at higher interest rates.”
Dr GV Ramanjaneyulu, an agriculture scientist and director with Centre for Sustainable Agriculture, is of the view that the push for DCT would only benefit the fertiliser companies. “The fertiliser companies feel that if farmers pay the whole cost of fertilisers and farmers get their subsidy through cash, they don’t need to get involved in the whole process. The delay in subsidy payments by the Union government to these companies is just one issue; there is also corruption because officers who sanction the subsidies take a cut. The companies benefit in that they get the whole money and don’t have to depend on the government. There is a huge delay in payments from the government,” he says.
He points to the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) that provides all small and marginal farmers up to Rs 6,000 per year as minimum income support. “This scheme was not part of the Union Budget. When you launch a scheme that is not budgeted, they have to do so by cutting costs in other areas. This has ended in delayed payments for key subsidies to the farm sector,” he added.
Kiran also took potshots at the PM-KISAN, calling it a cash transfer scheme which is more beneficial to political parties than providing subsidies to farmers. “When the cash transfer happens, it is politically beneficial for the government as generally in the people’s psyche, it is coming from the political leader. If the farmer goes to the market and gets a good price (with the aid of subsidies and better MSPs) for his crop, the goodwill is not instant but developed only over a period of time, the credit comes slow.”
The biggest challenge being faced by farmers is the lack of communication with the Union government, alleges Kiran. “The farmers are not able to communicate as the present government is one that isn’t good at listening, there is no debate happening. There were farmer agitations where farmers marched to Delhi but the Union government is not meeting farmer organisations, so any contact has been blacked out and there is no question of any discussion in these matters,” he added.