The government’s grand vision for a ‘New India’ is at variance with its narrow economic policies; the DBT seems to be all about transferring benefits to the industry.

The industry strategy on fertiliser subsidy remains similar to the classic tobacco industry response to cancer claims since 1954. Robert Proctor, a historian at Stanford coined a term for it: ‘agnotology’, whereby ignorance is deliberately produced and indisputable facts do not win arguments. Proponents of the “Direct Benefit Transfer of Fertiliser Subsidy” pilot claim it generates point-of-sale farmer traceability to stop leakages and timely payments to the industry. This is a good but not the complete illustration. To pick these low-hanging fruit, one need not cut down the tree itself though that is exactly what is planned.

The truth about DBT is about transferring benefits to the industry. The fertiliser subsidy DBT pilot project in 17 districts is well-planned deception like the Trojan horse meant to seduce the farmer. It is misleading as it does not incorporate all the draconian measures that will eventually be a part of the full roll out. Ultimately, the final form of DBT will allow the industry to price fertilisers at will and the burden for collecting subsidy from the government will be transferred to the farmers.

It is similar to the US sugar industry in 1960, successfully paying scientists and academics to delink sugar and heart disease by diverting attention to saturated fat. Realising the enormous opportunity, the largest international fertiliser companies, like Yara International, have started to buy Indian urea fertiliser plants for the first time, to get a toehold into the lucrative market.

The fertiliser price has two components; the fixed retail price and the subsidy component, which is variable. Today, irrespective of how the international urea price fluctuates, the farmers get to buy the urea bag at a fixed cost of ₹284. With the new DBT regime all that will be reversed on its head; the price of a urea bag will become variable while the subsidy component will be constant. In 2008, the international urea price breached the $500 per tonne mark and in India the urea retail price was ₹239 per bag. International prices are about half today but are perking up. Should the international price rise to 2008 levels in the DBT regime; the farmer may have to shell out ₹1,200 per bag.

A perfect analogy to explain the final version of DBT of the fertiliser subsidy regime is the LPG gas cylinder cost borne by the consumers. Before the DBT on LPG, consumers paid ₹450 for the gas cylinder. After the regime change, gas cylinder price has risen to ₹805. First the consumer purchases the cylinder at full cost with the subsidy component reimbursed, if applicable. Similarly at present, farmers just pay the subsidised retail price and take home the bag of urea.

However in the new regime, the farmer will have to register with land documents (difficult to procure) and pay the full price upfront. Later, the subsidised amount will be reimbursed to the farmer. It simply means that the capital expenditure and credit requirement for the farmer will increase by a third, for no fault of his. Remember, the most common cause of farmer suicides remains credit.

Just as Tim Harford explained ‘distort, dispute, distract’ in ‘The problem with facts”; first the fertiliser industry appeared to engage, next it sowed doubt about prioritising farmer needs over fertiliser industry profitability. In third stage, it employed  its enormous resources to get amenable experts to undermine farmers concerns and real expertise.

The new regime will also limit the quantity of subsidised fertiliser that a farmer will be allowed to purchase. Wheat, rice, potatoes, pulses, millets and such others require different nutrients in varying quantities depending of soil and crop selection. The policy negates this reality and goes back to the old bureaucratic generalisation of Indian agriculture, which has failed the nation repeatedly. Today, 100 million tenant farmers can buy subsidised fertilisers but under the new regime they will not be entitled to subsidised fertilisers because land records will not reflect their names.

The DBT of fertiliser subsidy can be beneficial if tweaked to protect farmer support. Farmers with their backs to wall, pray for parliamentary guarantee of safeguards because mere words are not legally binding. Farmers are hurt and feel betrayed, because the issue of livelihood are not the primary concern of farmer fertiliser co-operatives anymore. The last bulwark of farmer hope and resistance against the international fertiliser mafia has fallen.

The government’s grand vision for a ‘New India’ is at variance with its narrow economic policies. Officials only hope to rein fertiliser subsidy expenditure with innumerable economists advising the government egging them on. Sadly ‘doubling farmer income’ is becoming a parody against the establishment. Meanwhile, disengaged farmer voices are being drowned in the din generated by the fertiliser industry. The small farmers are in danger of remaining trapped by their circumstances.

Is anybody listening?