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Fertilizer Subsidy Scheme

Updated on: Dec 30th, 2022 - 9:34:36 AM

5 min read

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The government launched the Fertilizer Subsidy scheme to provide a subsidy amount to farmers to purchase fertilizers. The central government came up with this scheme to help farmers by cutting the costs of fertilizers. 

The government introduced the Direct Benefit Transfer (DBT) system in fertilizers in October 2016. A 100% subsidy on various fertilizer grades is released to the fertilizer companies under the fertilizer DBT system based on actual sales made to the beneficiaries by the retailers.


Fertilizer Subsidy Scheme Features

  • The selling price of the fertilizer will not be beyond the market price. Thus, the farmers need not pay a higher amount.
  • Every farmer is defined on an Aadhar card verification basis.
  • The farmer can decide how much he/she has to buy and what he/she needs to buy.
  • The government will pay the subsidy amount to purchase fertilizers directly to the companies.
  • After the proper verification of the Aadhar card of the farmer, the subsidy amount of the fertilizers purchased by him/her will get transferred to the bank account of the fertilizer companies.

Objectives of Fertilizer Subsidy Scheme

The main objective of the Fertilizer Subsidy scheme is to empower the farmers in India. This scheme aims to reduce the role of mediators in fertilizer costs. Earlier intermediaries were selling fertilizers at rates higher than those set by the government with a bifurcated payment system. It resulted in a burden on the farmers and unjust earnings for the intermediaries. 

The introduction of this scheme digitises the entire system as the producers will get a 100% subsidy amount after the registered purchase of fertilizers from the farmers. It will also ensure that agricultural labourers purchase fertilizers at the proper rates. Additionally, the government will get a record of farmers benefiting from the subsidy.

Advantages of Fertilizer Subsidy Scheme

  • The Aadhar card database of every farmer will be created, which will be beneficial in the future.
  • There will be transparency in fertilizer sales, and it will become easier for the farmers as there is no risk of fraud.
  • Farmers can prioritise their preferences under this scheme as they can buy things according to their needs and budget.
  • There will be a record of the subsidy amount and the real and actual sales.
  • The digital transaction system will create a database of farmers that financial firms like banks can utilise to give credit to them and benefit them.

Implementation of Fertilizer Subsidy Scheme

Under the Fertilizer Subsidy scheme, the government fixes the fertilizer subsidy in advance. However, the retail price may fluctuate depending on the commodity’s international price, impacting sellers’ costs. The government gives the fertilizer subsidy to the fertilizer companies, which sell the commodity at a reduced price. The government tracks the sales through Point of Sale (PoS) machines installed at retail outlets.

All subsidised fertilizers are sold to the farmers or buyers through the PoS devices installed at all retail shops. The farmers/beneficiaries are identified through Aadhaar card. The department of fertilizers has set up a project monitoring cell to oversee the implementation of the DBT system exclusively.

There was a requirement to deploy PoS devices at every retail shop and train retailers to operate the PoS devices to implement the DBT in the Fertilizer Subsidy scheme. Lead Fertilizer Supplier (LFS) has conducted 10878 training sessions across the county, and 2.26 lakh PoS devices have been deployed across every state in India.

The PoS device will capture the details of fertilizer purchase like the buyer, time of sale, land records, the quantity of purchase, the health of the soil, Aadhar number, and biometrics proof through the Aadhar card. The details will be counter-checked with the Pradhan Mantri Kisan Samman Nidhi (PMKSN) details, and they will be referred to at the time of subsidy allotment.

The production companies will receive the subsidy amount directly. The farmers will get financial assistance from the PMKSN yojana and the additional subsidy benefits under this scheme during the purchase of fertilizers.

SMS Service Under Fertilizer Subsidy scheme

The department of fertilizers has implemented the Short Message Services (SMS) to sell fertilizers to farmers in the DBT project. The buyer/farmer will receive a receipt on his/her mobile through SMS on every purchase of fertilizers. The department of fertilizers introduced the SMS system on 30 September 2020 in the PoS 3.1 version. The features of the SMS system are as follows:

  • The SMS contains the details like invoice number, retailer name, the total amount to be paid, the quantity purchased, and the subsidy borne by the government.
  • SMS will be used to send periodic SMS to farmers about the availability of fertilizers at the retail outlets from where they last purchased fertilizers.
  • Farmers can get information about the availability of fertilizers at the retail outlets by sending an SMS to 917738299899 (with the retailer ID).
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