The government today approved a proposal to extend urea subsidy till 2020 and implement direct benefit transfers (DBT) for disbursement of the fertiliser subsidy.
“The continuation of the urea subsidy scheme will ensure adequate quantity of urea is made available to the farmers at statutory controlled price,” according to a media release after the meeting of Cabinet Committee on Economic Affairs.
Urea is made available to farmers at a statutorily controlled price of Rs 5,360 per tonne. The difference between the delivered cost of the fertiliser at farm gate and maximum retail price is given as subsidy to manufacturers. Urea subsidy is projected to be Rs 45,000 crore for 2018-19, compared with Rs 42,748 crore this year.
The urea subsidy has been extended for three years till 2020 at a total estimated cost of Rs 1.64 lakh crore, the statement added. Normally, the ministry of chemicals and fertilisers takes approval for the urea subsidy subsidy on an yearly basis. This time it has received clearance for three years.
The CCEA also approved implementation of direct benefit transfer (DBT) for disbursement of fertiliser subsidy in order to reduce diversion and plug the leakages. In the statement, the government said it is in the process to roll out DBT in fertiliser sector nationwide. DBT would entail 100 percent payment to fertiliser companies.
Continuation of the urea subsidy will facilitate smooth implementation of DBT scheme in fertiliser sector, the statement said.
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