Business Today

Gone for a Toss

The government has set yet another deadline but lack of PoS devices and related issues are putting the fertiliser DBT programme on the back foot.
By Joe C. Mathew        Print Edition: August 13, 2017
Gone for a Toss
Picture: Ajay Thakuri

The government's ambitious direct benefit transfer (DBT) programme for fertiliser subsidy may hit the skids as point-of-sale (PoS) machines, required to carry out all such transactions for the sake of transparency, are in short supply. Close to 200,000 retail outlets across 11 states are supposed to receive these devices as a PoS-only buy-and-sell regime is afoot and pilots for the same are under way in 14 districts for almost a year now. Under the new practice, retail outlets equipped with PoS machines can read and record a buyer's Aadhar/ID details. Once the validation is done, the subsidy amount is credited to the bank account of the manufacturer concerned. Before making any authenticated transaction, retailers must enter the opening stock after tallying it with the stock recorded in the government's digital fertiliser management system.

While DBT schemes in other areas such as cooking gas, kerosene and foodgrains see consumers paying the full amount to retailers and getting the subsidy component reimbursed by the government, those buying fertiliser will continue to pay the subsidised rate. The subsidy part will be given to the fertiliser companies on the basis of actual sales made by the retailers on designated dates (four times a month).

The key objective of the scheme is to streamline fertiliser distribution, stop diversion of fertilisers to improve availability and ensure that the retailers are not overcharging. Is that happening at the pilot level?

Real time data available with the fertiliser department's mobile fertiliser movement tracking system suggests that the pilots lack in terms of farmer and retailer readiness. Despite months of rigorous focus, the government has not been able to bring in every retailer under the DBT umbrella. As on July 17, 2017, only 6,617 retailers or 70 per cent of the 9,328 retailers in the 14 pilot districts have started using PoS for transactions. Others may shut shop if the government insists that fertiliser companies will get subsidies only for the quantity that gets sold through PoS devices. It can also impact accessibility as not all retail shops are close enough to provide an effective replacement.

The second, and perhaps more critical factor is the frequency of PoS usage. On a given day, not more than one-fourth of the PoS-enabled retail shops registered a sale. For instance, out of the 645 PoS-enabled retailers in Karnal, Haryana, the maximum number of retailers who made PoS transactions on a daily basis over the past six months was 339 as on June 30. It is an indication of the transaction volume and also of retailer readiness.

At first, the kick-off date set by the government was January 1, 2017. It got extended by a month and then by another four months to May 31. In March, the government made it clear that post this deadline, the subsidy would be paid based on PoS transactions alone. Despite the threat, PoS machine deployment could not be speeded up and the new deadline set up this time is July 31. The companies are trying to pass on the blame to vendors saying that in spite of placing their orders, PoS devices are not delivered on time.

The original plan was to ensure that the states, where the pilots are being held, would move to the new system by October 2017. The pan-India rollout is expected in 2018.

The rollout is likely to be a watered-down version as subsidy payment to fertiliser companies on the basis of stockist-level distribution is expected to continue. The PoS-based calculation of subsidy component, being tried in the pilot districts, is unlikely to be expanded in the near future. Missing the deadline in this case would be a better option, though, as shifting to a PoS-based subsidy regime before the PoS-related teething problems are settled, may disrupt fertiliser movement and its availability.


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