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Direct Benefit Transfer process in fertiliser subsidy still far from perfect, says NITI Aayog commissioned study

Joe C Mathew     April 30, 2018

A study by consulting firm Microsave, commissioned by NITI Aayog on the performance of the ongoing pilot direct benefit transfer in fertilizer (DBT-F), programmes shows improvement in success rates of Aadhaar authentication but slippage in real time Aadhaar authenticated transactions.

A gradual roll-out of the project would have been beneficial, the agency points out.

The total outgo on fertliser subsidy was Rs 70,000 crore in 2017-18 - it's the second largest component of the government of India's subsidy programme after food. DBT-F is supposed to reduce misuse of the programme and provide relief to the targeted beneficiaries. The government has launched pilots in 14 districts across Himachal Pradesh, Bihar, Madhya Pradesh, Haryana, Kerala, Maharashtra, Karnataka, Telangana, Andhra Pradesh, Gujarat, and Rajasthan. The Microsave analysis will help plan a wider roll out in the coming months.

The study shows that fertiliser retailers 'adjust' transactions - report transactions on the IT platform with a delay -  due to Aadhaar unavailability with farmers at the time of purchase and Aadhaar authentication failure to minimise transaction time and manage high customer footfall. "Though the average transaction time through point-of-sale (PoS) device is five minutes, retailers are not inclined to use more than one device to manage high farmer footfall during peak season. This is because they would then have to hire a larger workforce," it says.

In fact, the incidences of adjusted transactions increased to 21 per cent as compared to 10 per cent observed in an earlier round of similar survey conducted by Microsave. It noted that retailers don't ask farmers their Aadhaar numbers and sell to them on a manual basis without Aadhaar authentication. Later, they adjust these transactions. The average transaction time through PoS is 5 minutes. The duration has not changed from the previous round of evaluation.

However, the response was positive in terms of transaction experience. The successful Aadhaar authentication in the first attempt has increased to 62 per cent as compared to 35 per cent in Round II. Overall, successful Aadhaar authentication in three attempts has increased to 97 per cent as compared to 93 per cent and 41 per cent in Round II and Round I, respectively, Microsave report points out. The study also reveals that 41 per cent of retailers update the fertiliser stock in PoS devices immediately after receiving the acknowledgement ID. The remaining 59 per cent of retailers take at least one day or more to update the stock. Ideally, retailers should not sell fertiliser without updating the stock in the PoS devices. However, pressure from the farmers and fear of losing business compel retailers to sell stock manually without Aadhaar authentication.

MicroSave conducted the evaluations over three rounds spanning a year, starting from September, 2016. "We had conducted the evaluations of pilot districts over three rounds. The first round was in September 2016, the second in January 2017 and the third during July to September 2017. The objective has been to provide the government with actionable solutions to improve implementation and preparedness for the national rollout of DBT-F," says Manoj Sharma, Director of MicroSave Asia.

The research covered 427 retailers and 5,659 farmers and was accompanied by interviews with 138 retailers and 185 farmers besides other stakeholders including district government officials, fertiliser company representatives, and district consultants.

The study recommends doubling of retailer commission and issue of new retailer licenses to streamline the nation-wide launch.

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