Saturday, April 7, 2012


Direct Subsidies of fertilizer to the farmers.

 Government announced nationwide rollout of  mobile-based Fertilizer Management System (mFMS)  based on the report of Nandan Nilekani Task Force propose direct transfer of subsidy regime for farmers.
The mFMS, to be launched itself on 2012, is designed to provide end-to-end information on the movement of fertilizers and subsidies, from the manufacturer to the retail level. “Direct transfer of subsidy to the retailer and eventually the farmer will be implemented in subsequent phases. This will benefit 12 crore farmers, while reducing the leakages and expenditure on subsidies by curtailing the misuse of fertilizers.
FMS is not a new concept. It was around the year 2000 that computer-based methods for decision support were introduced in the department of fertilisers through the National Informatics Centre (NIC) to implement the Integrated Fertilizer Management Information System (IFMIS). The IT-based applications included a Performance Monitoring & Evaluation system, Fertilizer Planning Information system, Fertilizer Distribution system, Import Management system, Handling & Payment system for Fertilizer Imports, and Finance and Budget Information system. But all these systems will now be accessible on mobiles too by end 2012.
Finance Minister Pranab Mukherjee said to bring down central subsidies to 1.75 per cent of GDP over the next three years. That in to reduce import dependence on urea, the government is finalising the pricing and investment policies for the key nitrogenous fertiliser. It is expected that with the implementation of the investment policy, country will become self sufficient in manufacturing urea in the next five years. In case of the P&K fertiliser, use of SSP will be encouraged through greater extension work. This fertiliser is manufactured entirely in the domestic sector. Enhanced production would bring down our dependence on imports in the P&K sector.
Finance Minister propose some tax incentives for the fertiliser sector. To boost inflow of low cost funds in the fertiliser sector, the government has proposed to reduce the rate of withholding tax on external commercial borrowings. “In order to provide low cost funds to some stressed infrastructure sectors, the rate of withholding tax on interest payments on external commercial borrowings is proposed to be reduced from 20 per cent to 5 per cent for three years,” he added.
Similarly, investment linked deduction of capital expenditure incurred in the fertiliser sector is proposed to be provided at the enhanced rate of 150 per cent, as against the current rate of 100 per cent. Likewise, the government has also proposed exemption of basic customs duty on import of equipments for setting up or expansion of fertiliser plants. “Imports of equipment for initial setting up or substantial expansion of fertiliser projects are being fully exempted from basic customs duty of 5 per cent for a period of three years up to March 31, 2015,” he remarked.
In order to keep the prices of fertilizers low, so that farmers are able to buy it easily as per his requirement, the cost of fertilizers is subsidized by the Government, Urea being the cheapest fertilizer due to heavy subsidies has been applied more in quantities by the farmers leading to imbalance in required nutrients for the plants, resulting stagnant or decreased production at the farms and also degradation of soil fertility. In order to overcome this issue, Government has come out with new fertilizer policy, called “Nutrient based Subsidy Scheme” (NBS) effective from (1.04.2010), wherein the subsidy has been fixed on nutrient content rather than on production cost. Further, the government has planned to shift subsidy payment from Manufacturer to Farmer in a phased manner in order to ensure availability of fertilizers at farm-gate.

Subsidy Structure:

Step I
Identification of Wholesaler, Retailer Chain into the System.
Tracking of Fertilizer Movement upto retailer level using Mobile Technology.
Capturing of information to / from retail points of fertilizer sales
Receipt of fertilizer at retailer level
Daily sales reporting by Retailer

Step II
Reconciliation of sales
Subsidy payment to retailers
Subsidy payment through banking channels

Step III
Use of Smart Card by the farmer
Registering individual sales into the system
Purchase at market price
The subsidy will be disbursed directly to the farmer on actual fertilizer purchases
Subsidy released to farmer’s account by the designated bank.
Online and Real time banking network to be in place for subsidy management
The funds will be provided by Govt. of India to the Nodal Bank of the designated bank.

Enterprise Wide System for Fertilizer Management

End to End solution for Fertilizer Management for central, state and local Administration
ICT Solution for disbursement of fertilizer subsidy under NBS based on last point sale.
Shifting of subsidy payment from “Manufacturer” to “End User” in phased manner
Track movement of the fertilizer up to the farm gate.
A single platform serving all the stake holders

Benefit of  mFMS
1. Fertilizer demand assessment at block / district/ state level
2. Preparation of supply plan and movement plan
3. Institutionalizing Smart Cards for authentication, POS as transaction instruments
4. Monitoring of Fertilizer movement from plants / ports up to retailer level
5. Monitoring of Sales by the retailer to the farmer and stock at retailer level
6. Fixation of Nutrient based subsidy rates (N,P,K,S, Micro nutrients)
7. Payment of Freight subsidy and Nutrient Subsidy to fertilizer companies when fertilizer is received at retailer level.
8. Providing fertilizer related information to farmers (NeGP)
9. Integration with other related systems like Soil Health Card, Land records, Irrigation etc
10.Leverage the transaction data for data warehousing, Mining and data analytics
11.  Integrated platform to promote value added services

Help out  solve Following Objectives

Work out a Mechanism for Implementation of Direct Subsidy to consumer
Assessing requirements, Planning and arranging for production and imports
Ensure Reasonable level of self sufficiency in the domestic production
Monitor allocation & supply linkage for movement and distribution
Efficient Disbursement and management of subsidy
Movement and distribution of fertilizers in coordination with States
Measures to curb Fertilizer hoarding, black marketing, pilferage
Bringing service orientation to the Agri Input programs
Increasing effectiveness of government service delivery
Automation of Financial concessions / subsidy for controlled & decontrolled Fertilizers
Fulfill demand of fertilizer requirement across the states


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