Pushing the reforms agenda, the government on Thursday made payment of fertiliser subsidy to companies conditional to providing acknowledgement of its sale to the farmer.
It is a precursor to introduction of direct cash transfer regime in the sector even though fertiliser minister and DMK nominee in the cabinet V Alagiri skipped the meeting. Finance minister P Chidambaram was also not present in the meeting.
Key UPA ally and agriculture minister Sharad Pawar again raised the issue of cap on six subsidised LPG cylinders to be provided to a family in a year and sought its revision.
Alagiri had earlier written to the Prime Minister objecting to the new fertilizer subsidy regime. Despite this, the Cabinet Committee on Economic Affairs on Thursday approved the Department of Fertilizers proposal that subsidy amount will be paid only if companies provide acknowledgement from retailers of the farmers having received fertilisers.
In this fiscal, the government has provided for Rs. 60,974 crore to ensure fertilizers, primarily urea, at affordable rates to farmers. The fertilizer subsidy burden had been rising with companies claiming more consumption without the government been able to verify the same.
The Thursday's decision aims to put in place a mechanism that can check the claim of companies on fertilizer sales and introduce cash transfer of subsidy which will directly go into the accounts of farmers.
"The new mechanism will help the government create a database of farmers who use different types of fertilisers," a senior government official said. The cabinet in 2010 had approved nutrient-based fertilizer subsidy regime but its implementation has been slow in the absence of sufficient data on the use of the fertilizer.