Agri Business

Changing subsidy payment mode, Centre hikes urea price

Our Bureau New Delhi | Updated on March 09, 2018


Maximum retail rate raised by Rs 2.50 for 50-kg bag

Farmers will have to pay more for urea, as the Government has raised the maximum retail price (MRP) to implement a changed system for the payment subsidy.

The Cabinet Committee on Economic Affairs (CCEA) approved the changes on Thursday as a precursor to direct cash subsidy to the farmers.

Through this, the Government aims to plug diversion of urea for industrial use and accordingly, reduce the overall fertiliser subsidy by at least 20 per cent.

Now, farmers will have to pay Rs 2.50 for a 50-kg urea bag.

The CCEA’s decision to increase the MRP by Rs 50/tonne is to provide an incentive to the retailer for acknowledging receipt of fertilisers from the manufacturer/importer or wholesale trader.

new system

Under the new system, “the payment of fertiliser subsidy to companies will be based on the receipt of fertilisers and the acknowledgement of receipt of fertilisers by retailers (last point of sale of fertilisers),” a Government statement said.

It also said that the acknowledgement of the receipt will be tracked on the information and communication technology (ICT)-enabled mobile fertiliser monitoring system (mFMS) and the fertiliser monitoring system (FMS).

A part of the subsidy will be paid on receipt of fertilisers in the district to the companies, it added.

Since retailers will be required to acknowledge the receipt of fertilisers either through the SMS-based application or through the Web application, some incentive is required to be given.

That is why urea MRP has been raised, officials said. Urea is the only fertiliser for which the Government fixes the MRP. The Government provides subsidy for 23 grades of fertilisers (both indigenously manufactured and imported).

There are over 2.3 lakh retail traders to sell fertilisers.

Currently, subsidy is given at the first point of sale.

A senior Government official said that the revised system will need mapping till the last point of sale that will enable implementation of direct cash transfer to the farmers.

The CCEA also approved a pilot project by the Department of Fertilisers, to be implemented in 10 districts, on information visibility of fertiliser sale to farmers.

This will also be tracked through the ICT-enabled tools, and identification of farmers will be done through Kisan credit cards, Aadhaar number, bank account number, etc. The project will start by the end of this year.


Published on October 11, 2012

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