The Hindu Business Line : Pay fertiliser subsidy through swipe card: Iffco

Keeping track
The starting point would be the manufacturing plant.
At the final point of sale, there will be an RFID reader to scan and decode the data in the tag.

Harish Damodaran

New Delhi, July 3 Are direct fertiliser subsidy payments to farmers a feasible alternative to the present system, wherein manufacturers are reimbursed for selling at below cost?

Well, according to the Indian Farmers Fertiliser Cooperative Ltd (Iffco) — the country’s No. 1 nutrients supplier with a 21 per cent market share in urea and 33 per cent for phosphates — the idea is eminently workable.

What the Rs 10,330-crore cooperative has mooted is a Radio Frequency Identification Device (RFID)-enabled mechanism in which the farmer has to just swipe a smart card through the reader terminal of a bank and get the subsidy amount directly credited to his account.

Manufacturers’ route

This is unlike the system now, where fertiliser companies sell nutrients to farmers at artificially low rates and the Centre makes good the difference between the higher ‘retention price’ (covering production costs) and the lower retail price. Thus, the subsidy, instead of being paid directly, is routed through manufacturers.

At present, about 40 million tonnes of fertilisers are sold annually, translating into 80 crore bags of 50 kg each. “Technology makes it possible for each of these 80 crore bags to have a distinct RFID tag, bearing a unique code specifying the manufacturer’s name, date of production, nutrient content of the fertiliser, subsidy payable, etc. This tag, costing about Rs 2 per bag, will be weather-proof and not prone to damage during transport and handling,” an Iffco official said.

The RFID codes can even be allotted to individual companies by a Government agency. The starting point would be the manufacturing plant, where the code is electronically written into the tag (attached to the bag) using an RFID writer. The RFID tag basically contains a microchip (integrated circuit) for storing the data and an antenna to receive and transmit the radio frequency signals.

“We can have RFID writers even at the intermediate distribution points, so that data on movement of the bag is recorded on the tag. Only at the final point of sale, there will be an RFID reader to scan and decode the data in the tag. When the farmer produces his RFID-enabled smart card after making the necessary payment, the tag code is transferred from the bag to the card. He can then swipe this card at the bank and get the underlying subsidy directly credited to his account,” the official explained.

Trial run

When asked whether the system was amenable to implementation on the ground, he pointed out that RFID readers were only an improvisation of barcode scanners that “we get to see in many small-town rural stores”. For a start, it can be tried out in Punjab and Haryana, where every farmer maintains a bank account.

Further, Iffco alone has some 38,000 retail outlets, where installing RFID scanning machines can be done easily. “Ten years ago, it was inconceivable to deliver subsidy individually to 11 crore-odd farmers. Not any longer,” the official claimed.

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