On DBT-F Rollout

I was reading the book "Rebooting India" by Nandan Nilekani and Viral Shah for the past several days. It contains a treasure trove of information on the Aadhaar project as it comes from two of the top people at UIDAI with anecdotes by several others. I would definitely post some excerpts from the book and highlight a few points of importance in my future posts.

For now, I am writing about an idea I have been toying with since a few months which I have expressed in several online forums.

I humbly wish to state that the DBT rollout for fertilizers is not going to work as smoothly as expected. Ground work in terms of steps need to be taken to launch DBT-F, if I may coin the acronym needs to be in place.

Firstly, those fertilizer factories that have been closed down due to losses need to be revived. Secondly, fertilizer production needs to be boosted in order to reassure farmers that adequate quantities of them will be available and that there is no need to hoard them.

Factories producing fertilizers are to be reassured that all due payments would be cleared. In fact these factories have been demanding DBT-F rollout, which would at least make subsidy payments timely for them.

For DBT-F to work farmers need to be on-boarded into the system. It is very obvious that their aadhaar number would need to be made mandatory which could pose problems. An alternative in the form of Voter-ID or PAN card should be thought of. The tracking of fertilizer sales till the retail level would be difficult. May be the factories producing fertilizers should themselves market their produce as fertilizer distribution companies. How to ensure that there is buy-in of the new system and least amount of protest or resistance?

Solution:

Only phosphorous and potassium based fertilizers should be brought under subsidy regime initially. Since these two are deregulated and sold at market rates a one-time KYC documentation/web site based registration to on-board these farmers could be done. Once DBT-F is implemented in deregulated fertilizers farmers will flock to register themselves (they are getting new benefit of reduced prices). Later, the same farmers would definitely buy urea which could be brought under DBT. This rollout of DBT where PK fertilizers are brought under DBT first can progress faster and, well before 2018 end, nationwide rollout can be achieved.
If would be difficult to accurately identify farmers and anyone purchasing fertilizer should be thought of as a farmer. If there are shortages of fertilizers then definitely there will be hoarding. That is why adequate quantities of fertilizers need to be produced and sold. So after a few cropping seasons KYC of these purchasers should be strengthened by linking with land records.