₹1.7 Lakh Crore Support May Soon Go Straight to Bank Accounts via DBT, Says Agriculture Minister
CHANDIGARH: Concerned over the diversion of heavily subsidised fertilisers, Union Agriculture and Farmers’ Welfare Minister Shivraj Singh Chouhan has signalled a major overhaul of India’s fertiliser subsidy system. He has proposed that the Centre’s annual subsidy—estimated at around ₹1.7 lakh crore and, by some accounts, exceeding ₹2 lakh crore—be transferred directly into farmers’ bank accounts through the Direct Benefit Transfer (DBT) mechanism.
Speaking at the inauguration of the three-day Pusa Krishi Vigyan Mela at the Indian Agricultural Research Institute (IARI) in New Delhi, Chouhan said the current system largely benefits fertiliser manufacturers rather than farmers themselves.
Under the existing subsidy mechanism rolled out in phases since 2018 the government reimburses fertiliser companies after retail sales are digitally verified. More than 2.3 lakh retailers across the country use Point-of-Sale (PoS) machines linked to the Department of Fertilizers’ e-Urvarak portal. Farmers authenticate purchases using Aadhaar, Kisan Credit Cards, or other IDs, enabling real-time tracking. Subsidy claims for nutrients such as nitrogen, phosphorus, potash, and sulphur are typically processed within 7–10 working days.
However, Chouhan argued that despite digital safeguards, the subsidy pipeline still routes funds primarily to companies.
Highlighting the extent of government support, he noted that a bag of urea costing around ₹2,400 in the open market is sold to farmers for just ₹265–270 due to heavy subsidy. “If such a large subsidy is transferred directly to farmers’ accounts through DBT, they will be able to decide which fertilisers to purchase and in what quantities. The real beneficiary should be the farmer who applies the fertiliser in the field,” he said.
The minister flagged concerns about the diversion of subsidised fertilisers to non-agricultural uses, including industrial consumption, as well as complaints that farmers do not always receive the full intended benefit.
Calling for a national debate and broad consensus, Chouhan said discussions are already underway and a workable mechanism is feasible. He cited the success of DBT schemes such as PM-KISAN and noted that nearly 8.05 crore farmers are now linked through Aadhaar-based digital IDs under the Agristack platform—potentially enabling targeted transfers.
Fertiliser subsidies constitute a major component of the government’s agricultural support spending. The 2026–27 Union Budget has allocated ₹1.70 lakh crore for fertiliser subsidies—₹1.16 lakh crore for urea and ₹54,000 crore under the nutrient-based subsidy scheme for phosphatic and potassic fertilisers. This is slightly lower than the revised estimate of ₹1.86 lakh crore for the current fiscal year, reflecting shifts in global prices and domestic demand.
The proposal revives a long-discussed structural reform in the sector. Experts suggest that direct transfers could reduce leakages, improve fertiliser-use efficiency, and empower farmers with greater choice. However, they also caution that implementation challenges—such as administrative readiness and potential adjustments in fertiliser market prices—would need careful management.
The union minister also outlined broader reform priorities including stricter monitoring of funds for farm mechanisation and irrigation technologies such as drip systems and polyhouses, timely disbursal of Kisan Credit Card loans—now accessed by 75% of small farmers at an effective interest rate of 4%—and promotion of integrated farming models to boost incomes.
He also launched a “Developed Agriculture Resolution Campaign,” calling for village-level outreach by scientists and urging IARI to expand the scale of the annual mela next year.
While no timeline has been announced for implementing the fertiliser DBT shift, the minister emphasized that Indian agriculture must move beyond food security towards higher farmer incomes, sustainability, and nutrition-focused growth.
The agriculture experts believe that the decision was taken to counter the diversion of heavily subsidized fertilizers for industrial usage. Even the repeated steps taken by the government including neem coating failed to put a check on the diversion as recently nearly 500 bags of agriculture urea were recovered from a factory in Yamunanagar of Haryana.
