UP shows way in direct subsidy payment to farmers

Uttar Pradesh farmers have taken well to direct benefit transfers, though there are doubts if it can be extended to fertilisers.

Written by Harish Damodaran | Moradabad | Updated: December 10, 2015 9:36 am
A farmer near Bijnor prepares his field for sowing wheat. (Express Photo by: Praveen Khanna) A farmer near Bijnor prepares his field for sowing wheat. (Express Photo by: Praveen Khanna)

Akhilesh Yadav’s government in Uttar Pradesh is turning out to be a pacesetter in implementation of direct benefit transfers (DBT) to farmers.

Farmers in UP got Rs 28.60 per quintal from the state government for the sugarcane they supplied to mills during the 2014-15 crushing season. The payments, totalling Rs 2,127.25 crore, were made based on lists furnished by mills of their growers along with the quantum of cane delivered.

READ: A tale of two extremes

This information — verified by district cane officers and cooperatives societies through whom the purchases were done — was used to credit the payments to individual bank accounts of growers.

A cross-section of farmers in Moradabad and Bijnor districts The Indian Express spoke to confirmed having received the Rs 28.60 relief from the UP government during August-September, even while they criticised it for not forcing mills to pay fully the balance Rs 251.40 per quintal due last season.

But even more ambitious is an ongoing exercise of online registration of farmers for DBT purposes. Since last September, when it was launched, the state government has registered over 36 lakh farmers, each assigned a unique ‘Kisan ID’ number. These cover details of the names of the farmers; the village, block and district to which they belong; land particulars (holding size, khasra and khatauni numbers, etc); mobile numbers and bank accounts.

The DBT portal of the UP agriculture department is already being used for disbursal of subsidy on seed purchases by farmers registered with it.

For instance, the subsidy on seeds of certified wheat varieties has been fixed at Rs 1,400 per quintal in the current 2015-16 rabi season. Farmers can buy these from stores belonging to the agriculture and cooperative departments, UP State Agro Industrial Corporation, UP Seed Development Corporation or Kribhco and Iffco at the notified market price of Rs 3,000 per quintal. The subsidy amount is, then, transferred directly into their bank accounts within 15 days of purchase.

“We have covered five lakh of the 36 lakh-plus registered farmers under DBT so far this season. Since sowings are still on, I won’t be surprised if the figure ends up at 8-10 lakh,” Amit Mohan Prasad, principal secretary (agriculture), UP government, said.

He estimated the total seed subsidy credited through DBT to touch Rs 175 crore in rabi 2015-16. That includes Rs 161 crore just on 11.5 lakh quintal of wheat seeds and the rest for other rabi crops like chana (chickpea), matar (field-pea), masur (lentil) and mustard.

In the 2015 kharif season, the DBT scheme was restricted to hybrid paddy seeds, with 15,000 quintal distributed to 1.5 lakh farmers at an average subsidy of Rs 130/kg.

“Apart from seeds, we are providing subsidy on agricultural implements such as rotavators, seed drills, disc harrows, cultivators and knapsack sprayers via DBT. Our plan is to extend this to micronutrients, gypsum and other inputs as well,” Prasad said.

Incidentally, the UP government’s direct transfer of relief to cane growers has been replicated by other states and the Centre, too. The latter, on November 18, announced a production subsidy of Rs 4.50 per quintal on cane to be crushed in the 2015-16 season, with this money to be “paid directly to the farmers on behalf of the mills”.

Earlier last month, the Punjab government agreed for a similar direct subsidy of Rs 50 per quintal on cane processed by private mills in the state.

Subsidy reform: Seeding DBT on the ground

A farmer displaying the DBT credit entry in his bank passbook.(Express Photo by: Praveen Khanna) A farmer displaying the DBT credit entry in his bank passbook.(Express Photo by: Praveen Khanna)

Zaheer Ahmed, a 12 bigha (two-acre) farmer from Chhajlet village in Kanth tehsil of Moradabad district, bought two 40-kg bags of the high-yielding HD-2967 wheat variety seeds on November 15. That purchase, from the Uttar Pradesh agriculture department’s local seed store, cost him Rs 2,400. On November 26, he got Rs 1,120 credited to his account at the Prathama regional rural bank, with the passbook entry showing it as a NEFT or National Electronic Funds Transfer from the UP treasury.

“I got the money (subsidy on the seed) without any problem. It’s better than buying at Rs 1,280, which is what I am effectively paying for the two bags,” says Ahmed.

But how is paying Rs 2,400 upfront and then claiming Rs 1,120 as subsidy better than buying straightaway at Rs 1,280? “It’s simple. If something is offered at a subsidised rate, it is prone to be bought by traders and resold at a higher price. Here, there is no scope for diversion, as the seeds are being sold at the market rate and farmers, not traders, are getting the subsidy transferred separately into their bank accounts,” he explains.

Farmers like Ahmed are beneficiaries of a direct benefit transfer (DBT) system introduced by the UP government from the 2015 kharif crop season. Under it, subsidy on seeds and other inputs are credited directly to the bank accounts of farmers registered with the state agriculture department’s online DBT portal. Since every farmer has a unique ‘Kisan ID’ number carrying all relevant information, including that of his bank account to which transfers are to be made, the subsidy due to him is less likely to go to somebody else.

Farmers purchasing wheat seeds from a government outlet in Moradabad. (Express Photo by: Praveen Khanna) Farmers purchasing wheat seeds from a government outlet in Moradabad. (Express Photo by: Praveen Khanna)

Moreover, the state government has capped the subsidy to a maximum area of five acres, corresponding to the holding limit for a ‘small farmer’. At one bag of wheat seeds per acre, it translates into a maximum subsidy of Rs 2,800 per farmer. “This again is good for small farmers like me. Earlier, the big farmers or even traders with connections to local agriculture and cooperative department officials would take much of the available subsidised bags in their trolleys, leaving very little for others. But now it is pehle aao, pehle paao (first-come, first-served) and nobody, big or small, gets more than five bags. So, the subsidy goes to 1,000 farmers, as against 500 previously,” Ahmed points out.

In the new system, the farmer pays by cash and collects the receipt against his purchase from the seed store-in-charge. The latter deposits the monies received thus from all farmers to the state government’s designated nationalised bank account the following day. He also submits online the list of farmers with their respective subsidy claims to the district agricultural officer, who verifies these against the information already entered in the DBT portal. The claims are further checked at the next level of the deputy director of agriculture for the district, who approves the payment from the treasury to be directly made into the individual farmer accounts.

“The whole process is transparent and most subsidy transfers take not more than ten days from the date of purchase,” claims Jitendra Kumar Tomar, joint director of agriculture for the Moradabad division that also covers Bijnor, Amroha, Sambhal and Rampur districts.

The UP government has, for the ongoing rabi 2015-16 season, fixed the seed subsidy at Rs 1,400 per quintal for wheat and a flat Rs 3,300/quintal on pulses (chana, matar and masur). The corresponding notified per-quintal market rates — which farmers need to shell out upfront — are Rs 3,000 for wheat seeds, Rs 6,790 for red chana, Rs 8,650 for white kabuli chana, Rs 5,260 for matar, Rs 9,150 for large-seeded masur and Rs 9,230 for small-seeded masur.

For kharif 2015, the DBT subsidy was limited to hybrid paddy seeds marketed by private players like Bayer CropScience, DuPont-Pioneer, Tata-Metahelix, Nuziveedu and VNR Seeds. These firms sold the seeds under the agriculture department’s supervision at prices ranging from Rs 270 to Rs 294 per kg — at six kg per acre — and the subsidy entitlement was set at Rs 130 per kg.

But can the DBT scheme be extended to other inputs, especially fertilisers that are a big-ticket subsidy item for the Centre, costing well over Rs 1,00,000 crore annually if fully provided for? Most farmers The Indian Express interacted with in Moradabad and Bijnor seemed unanimous that subsidy delivered through DBT did reach the right persons. Be it the subsidy on seeds or the state government’s Rs 28.60 per quintal relief payment to cane farmers, there were no complaints of money not getting credited to bank accounts of the intended beneficiaries.

The one significant concern that farmers raised with regard to DBT pertained to the upfront money to be paid. In the case of seeds, this is a one-time affair, entailing an expense of not more than Rs 6,000 for a farmer planting five acres of wheat.

In fertilisers, however, it is a different ball game where a wheat farmer would have to apply about two 50-kg bags of urea, one bag of di-ammonium phosphate (DAP) and 1-1.5 bags of 12:32:16 complex fertiliser per acre. Even at the current subsidised rates — Rs 348/bag for neem-coated urea, Rs 1,191 for DAP and Rs 1,075 for 12:32:16 — the total expenditure works out to over Rs 3,500 per acre or Rs 17,500 for five acres.

“If we were to pay the actual market rate, the outgo would probably double. Not all farmers can afford this in today’s context,” notes Subodh Kumar, who farms seven acres at Pipli Jat village of Bijnor’s Chandpur tehsil.

Farmers in his area are suffering the twin-blow of a crash in basmati paddy prices and not being paid fully for cane supplied to mills even in the last 2014-15 sugar season (October-September).

“In 2013, we sold Pusa-1509 variety paddy for Rs 4,400-4,500 per quintal. Last year, it fell to Rs 2,400-2,500 and, this time, all we got was Rs 1,200-1,400. How can we pay more for inputs, when our own crop realisations are virtually halving each year, which is unheard of in any industry?”, he quips.

It is no different with cane. Even as crushing for the new 2015-16 season has started, UP sugar mills, as on December 7, owed farmers Rs 2,445 crore against the cane crushed in 2014-15 and valued at Rs 20,645 crore at the state advised price of Rs 280 per quintal.

“There has been no payment from mills after March. For most farmers, even bare survival is in doubt,” adds Kumar. So much for DBT.

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