Study reveals how has Direct Benefit Transfer modernised fertiliser market?

The objective of the study was to examine the field implementation of DBT-F closely, evaluate system efficiency, identify challenges, and provide actionable solutions

Study reveals how has Direct Benefit Transfer modernised fertiliser market?

MicroSave Consulting (MSC), a global consulting firm that works in financial, social, and economic inclusion, has released the results from a nationally representative study of the Direct Benefit Transfer in Fertilizer (DBT-F) programme. The objective of the study was to examine the field implementation of DBT-F closely, evaluate system efficiency, identify challenges, and provide actionable solutions.

MSC had conducted four rounds of evaluation on the request of NITI Aayog and the Department of Fertilizers (DoF), Government of India. The consulting firm evaluated DBT-F from 2016,during the pilot phases up until 2018, when the programme was rolled out nationwide. For the nationally representative study, MSC conducted quantitative research with 1,182 retailers and 11,281 farmers across 18 states and 54 districts in the country. Furthermore, MSC undertook qualitative interviews with other stakeholders such as district agriculture officers, block agriculture officers, fertiliser company representatives, lead fertiliser suppliers, state coordinators, and district consultants.

Major findings from the study

  • Instances of manual sales without Aadhaar and “adjusted” transactions fell from 21 percent in the third round of evaluation to 13. percent in the current round. Adjusted transactions are those that retailers often undertake without verifying the farmers’ credentials, only to update their records later. The retailers adjusted transactions when a farmer’s Aadhaar was not available at the time of fertiliser purchase or in cases where the Aadhaar authentication failed. Moreover, retailers often did not ask farmers for their Aadhaar number to purchase fertiliser and simply sold it by manually adjusting the transactions later. The primary reason for this was to minimise transaction time during peak sales periods.
  • Among Aadhaar-authenticated transactions, 86.6 percent were successful on the first attempt. Overall, successful Aadhaar authentication in three attempts increased to 99 percent in the current round from 97 percent in the third round of evaluation.
  • The average time it takes for a transaction through point-of-sale (PoS) devices improved from four to five minutes in the third round of the evaluation to three to four minutes in the current round. The government had increased the server capacity by deploying new servers to improve the transaction time.
  • Retailer training and awareness efforts that the Department of Fertilizers and fertiliser companies undertook are laudable. Of the total retailers surveyed, 90 percent received at least two training sessions. Of these retailers, 83.1 percent stated that the training was sufficient to understand the features and operations of the PoS device.
  • The majority of farmers (75 percent) and retailers (59 percent) preferred the DBT-F system to the previous manual system of fertiliser distribution since it has improved supply while easing record keeping and paperwork.

Highlighting about the study, Mitul Thapliyal, Partner and Leader—Government and Social Impact—MSC said, “DBT-F is one of the fastest implemented DBT programmes in the country. The endeavour works to boost transparency by tracking the movement, requirement, availability, and sale of fertiliser in real-time. Farmers prefer the new system because it has improved the availability of fertiliser and reduced instances of overcharging.”

“DBT-F platform now allows the government to think about the next set of reforms to promote balanced use of fertiliser and helps make the fertiliser distribution process more efficient,” Thapliyal added.

Under the programme, the government remits the subsidy to fertiliser companies only after retailers have sold the fertiliser to farmers through Aadhaar-based authentication. Retailers can also use the Aadhaar-enrolment ID along with the Kisan Credit Card (KCC) or Electoral Photo ID Card (EPIC) to authorise the sale if a farmer has not yet received an Aadhaar number after enrolling for it. Unlike the previous system, where the government paid the subsidy after production and dispatch of fertiliser, farmers under the DBT-F system may purchase any quantity of subsidised fertiliser regardless of the land size they possess or cultivate.

As per government estimate, in its first year of implementation, DBT-F has saved US$ 1.54 billion to the exchequer. It has boosted transparency by real-time tracking of the movement, requirement, and availability of stocks.

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