The Hindu Business Line : Subsidy by card

The Union Minister for Chemicals and Fertilisers, Mr Ram Vilas Paswan, is not convinced that the pilot project mooted in the Union Budget to provide fertiliser subsidy direct to the farmer rather than to the industry will work, and fears more red-tapism. Given the way it is structured, the Minister is right, but only about the modality. What is unacceptable about the plan is that it calls on farmers to pay market prices for the fertiliser and then go to the government with the coupons to collect the subsidy. Today, it is the fertiliser manufacturer who supplies the fertiliser to farmers at the controlled price and waits for months at the government's door to collect its due. Despite their considerable staying power, companies are themselves too stretched by the long wait for the subsidy. Farmers cannot be exposed to such cruelty, and it is unimaginable that governments of the future will be any more prompt in meeting these obligations. So this plan is best dumped in the bin. One trusts the Minister is at least convinced about the principle, for providing subsidy direct to the farmers is the best way of ensuring that public money fully reaches the intended beneficiaries, and does not go to prop up inefficient producers. It is the method of delivery, as reportedly conceived for the pilot project, which is the problem.

But there is an elegant and painless alternative — the Kisan Credit Card. Over six crore farmers already have enrolled in the scheme that is meant to deliver bank credit smoothly to farmers. Since banks have authenticated the credentials of these farmers, crediting the subsidy to the accounts of those eligible can be done in a trice electronically, with least administrative cost to the government and, most important, causing the least hassle to the farmers. The Rs 35,000-crore subsidy slated for the current year, divided among 11 crore farmers, is still a tidy sum; indeed enough for each to buy at the market price all the fertiliser needed for at least one hectare. It is true not all farmers today have the card, but the chances are that those who do not will quickly enrol themselves with the nearest bank if the subsidy is waved at them.

Though Mr Paswan's criticism is directed at the proposed process, there is every possibility that lobbyists of the present arrangement of indirect intervention will derail the debate into one of criticism of the philosophy of direct intervention itself. That would be unfortunate. Given that the present ruling arrangement is an example of an unbounded coalition government, opinions of individual ministers pack a far greater punch than would be suggested by the accepted notions of Westminster style Cabinet system of governance. Let not a good idea be killed because the first draft is clumsy.

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