Lack of PoS machines may delay nationwide direct transfer of fertiliser subsidy rollout

Even as the government is working aggressively for the nationwide launch of direct benefit transfer (DBT) of fertiliser subsidy from the start of next financial year, non-availability of point-of-sale (PoS) devices impede the ambitious project.

This comes in the backdrop of Prime Minister Narendra Modi on 8 November declaring 500 and 1,000 banknotes invalid which has led to a cash crunch in the country. The government has announced a slew of measures to ease the situation including deployment of PoS machines to withdraw cash.

InfraCircle on 25 August first reported that the National Democratic Alliance government is contemplating to transfer fertiliser subsidy directly to manufacturers under the proposed DBT.

The pilot project of fertiliser DBT model is currently on in Krishna and West Godavari districts in Andhra Pradesh starting 1 September, while dry runs are also being simultaneously done in 14 selected districts across the country.

“Under the proposed DBT model, the subsidy will be paid on the basis of actual sales captured on a PoS device. However, we are facing difficulty in getting PoS machines, as the bulk of it is being diverted to banking industry these days because of the demonetisation exercise,” a senior government official said on condition of anonymity.

Under DBT, a beneficiary gets subsidy amount credited directly in her bank account. However, in case of fertilisers, the government has tweaked the DBT model wherein manufacturers will be repaid (subsidy) only for the fertiliser bought by the intended beneficiaries who will be identified through their Aadhaar or voter identification details.

The official further added that a total of 7,000-7,500 PoS machines are required for the pilot project. However, only 4,500 machines have been supplied by fertiliser firms till now.

Another government official, who also did not want to be named, confirmed the concerns and said companies have been asked to expedite the supply of PoS machines which will in turn help in completion of the dry runs of the proposed DBT by March 2017.

“We will need around 180,000 PoS machines for the nationwide rollout of the DBT. The current crisis due to demonetisation may be a yardstick for the successful rollout of the DBT project in the entire country. However, we have asked fertiliser manufacturers to speed up the procurement process of PoS machines,” added the official.

The government, which has made a provision of Rs.70,000 crore for fertiliser subsidies in the Union budget of 2016-17, plans to introduce fertiliser DBT in order to prevent leakages.

The pilot project for DBT in fertilizers was likely to commence in eight districts in the current rabi season and in another eight districts in the next kharif season to capture authenticated retailer sales and buyer details. However, it has been decided to finish the process in all 16 districts by end of this financial year.

Queries emailed to the spokesperson of the ministry of chemicals and fertilizers on 5 December remained unanswered.

Analysts, however, term it as a temporary setback.

“Lot of teething issues will come up in implementing the DBT project. Irrespective of all this, if the government implements direct benefit transfer in case of fertilisers, it will really be a worthy effort,” said K. Ravichandran, senior vice president and co-head, corporate ratings at Icra Ltd.