1. Pilot Rollout for DBT in Fertilizers Department of Fertilizers 07 Sep 2016

2. Department of Fertilizers Background…..One Slide2 Feb 2011 Task Force headed by Shri Nandan Nilekani recommended a phased approach for DBT in fertilizer subsidy. Department of Fertilizers adopted this phased approach and developed mobile Fertilizer Monitoring System (mFMS). Phase I is operational since Nov 2012. May 2013 Prime Minister Office (PMO) advised that DoF should first implement IT solution for capturing the retailer’s sale and building beneficiary database. Then DoF should move to DBT. Jan 2015 A High Level Committee (HLC) recommended farmers be given direct cash subsidy (about Rs 7000/ha) and fertilizer sector can then be deregulated. But it could not be taken forward because of challenges in identification of beneficiaries, determination of entitlements.

3. Department of Fertilizers Background…..Two Slide3 Nov 2015 A Strategy paper on “Soil Health Mapping and Direct Benefit Transfer of Fertilizer Subsidy” from Director General, ICRISAT. It proposed for creation of national database of eligible beneficiaries with information on land holding and type of crop cultivated on the land for DBT. Mar 2016 Following decisions were taken in a meeting in PMO:  Registration of farmers to be done with the help of PoS machines.  As per the budget announcements, the project to be started on a pilot basis.  A committee headed by CEO, NITI Aayog to recommend and finalize modalities of the pilot roll out.

4. Department of Fertilizers Reply of Hon'ble Minister, Chemicals and Fertilizers to a Starred Question in Rajya Sabha on 29 th Apr 2016 “ After the announcement of Hon'ble Finance Ministers budget speech, 2016-17 regarding the proposal to introduce DBT on pilot basis for fertilizer in a few districts across the country with a view to improving the quality of service delivery to the farmers, Department of Fertilizers has already initiated the process to pilot the proposal in few select districts to create robust database that would capture the retailer's sales and buyer details (Demographic data, Bank account, Aadhaar number, Land records etc., whichever is available). This exercise would identify and evaluate field level challenges. The details regarding payment of subsidy and the resultant savings can be provided only after the receipt of field level challenges from the pilot districts. However, the Government intends to plug pilferages by use of technology. In the entire process, protecting the interest of farmers is Government’s topmost concern. ” Slide4 The pilot will be conducted on the principle of “NO DENIAL”. No buyer/farmer will be denied fertilizers for want of Aadhaar.

5. Department of Fertilizers Expected outcomes of DBT Slide 5 1.Significant impact on prevention on leakage and diversion. 2.Create Aadhaar seeded database of beneficiaries. 3.Transaction visibility at buyer level. 4.Subsidy transfer to manufacturer on basis of actual sales. 5.Identify field level challenges both at the retailer and farmer level. 6.Infrastructure level challenges such as network connectivity and devices. 7.Acceptance levels (of retailer and farmer) towards technology intervention 8.Capacity levels such as literacy levels (of retailers) to operate PoS machine Indirect Benefits Putting up a PoS device at 1.5 lakh retailers will create a channel which will provide Unlimited Opportunities for the Government to reach Rural India. This can become service delivery channel for other ministries. Digitizing transactions will create purchase history of farmers, which can be used by Financial Institutions to provide credit to farmers based on transaction history at Fertilizer outlets.

6. Department of Fertilizers Traditional DBT model Slide 6 The key process of traditional DBT model is:  Beneficiaries and their entitlements are defined.  Aadhaar number is seeded into digitized beneficiaries list and bank A/C.  After Aadhaar based authentication, subsidized entitlements are sold to beneficiary at market price.  Subsidy amount is transferred to the beneficiary after sale transaction.  Beneficiary withdraws payment from multiple channels like BC, ATM, Bank counter.

7. Department of Fertilizers Challenges in implementing traditional DBT in Fertilizers Slide 7 DBT in Fertilizers is much more complex than DBT in other schemes.  Beneficiary entitlement is not defined.  Beneficiary is also not defined. Presently any one is allowed to purchase fertilizer.  Subsidy amount is more than twice of subsidized price. Hence it will be huge burden if farmer is asked to pay MRP upfront and then get subsidy in his account.  Subsidy component is not same for all products in Fertilizers. Multiple products (Urea, P&K etc) have varied subsidy amounts.  Subsidy component varies plant to plant for the same product.  There is minimal IT infrastructure at retail outlets.  Connectivity in rural India could be challenge for smooth functioning of PoS devices.

8. Department of Fertilizers Subsidy for Urea manufactured by NFL Slide8 PlantSubsidized Price (MRP**) Subsidy component Market Price of Urea Nangal 268728984 Panipat 268659916 Bathinda 268572829 Vijaipur-I 268450707 Vijaipur-II 268407663 (All prices are in Rs per 50 Kg bag) ** MRP includes dealers’ margin and mFMS IT charges.

9. Department of Fertilizers Proposed DBT Model in Fertilizers Slide 9 In light of these challenges, the proposed DBT model in Fertilizers is: DBT in Fertilizers is one of largest reforms in independent India.  Selling price of fertilizer will not move to market price, unlike LPG. Farmer will not be required to pay market price upfront.  At the time of sale transaction, the farmer will purchase at subsidized MRP, however the subsidy amount will be paid by the Government on behalf of farmer, directly to the manufacturer.  As of now subsidy is paid to the manufacturer on basis of “receipt at retailers”, as per proposed model the subsidy will be paid based on “actual sales” captured on PoS device.  Subsidy to manufacturer will be paid on weekly basis.

10. Department of Fertilizers DBT Process Flow 1.Identification of farmer/buyer on basis of Aadhaar authentication, Voter ID or KCC. 2.Collect other demographic details and mobile number from the farmer. 3.Get recommendation on type and quantity of fertilizers from land records database and soil health database. 4.Allow farmer/buyer to decide type and quantity of fertilizer to be purchased. 5.Once purchase is confirmed, the system will indicate amount to be deposited by farmer based on MRP and amount to be paid by Government on behalf of farmer. 6.Post purchase, a SMS is sent to the farmer/buyer about the purchase made. 7.The system will automatically calculate subsidy to be paid by the Government to the concerned fertilizer company. Slide10

11. Department of Fertilizers Proposed Process Slide 11 Buyers visits Retailer Buyer shares his Aadhaar Buyer shares Voter ID or KCC and is advised to enroll for Aadhaar NO Demographic details are entered Sale transaction details are entered Buyer shares his Mobile Demographic records are captured using e-KYC UIDAI YES Buyer shares mobile number of any family member NO Retailer login with Aadhaar Bio Auth or Mobile OTP Auth YES Sale Completed Demographic details are not captured after first transaction Recommendations from Land records and Soil Health card

12. Department of Fertilizers Scope of Pilot Slide 12 Scope of Pilot will be: Capturing sale transaction details Capturing buyer’s details Transfer of subsidy based on actual sale on weekly basis.

13. Department of Fertilizers List of pilot districts Slide13 The Pilot project would run in 16 districts from Oct 2016 onwards. Sr. NoStateDistrict Aadhar Saturation (%) 1BiharKishanganj85.46 2West BengalMaldah81.27 3Madhya PradeshHoshangabad103.74 4HaryanaKarnal105.3 5HaryanaKurukshetra105.47 6Andhra PradeshKrishna98.54 7Andhra PradeshWest Godavari99.96 8MaharashtraNasik96.63 9Himachal PradeshUna110.66 10KeralaKannur104.04 11TelanganaRangareddy117.63 12KarnatakaTumkur100.97 13MaharashtraRaigarh96.01 14West BengalHooghly90.12 15RajasthanPali97.78 16GujaratChhota Udaipur84.86

14. Department of Fertilizers Existing Payment Process Fertilizer is despatched from manufacturing plant as per movement plan Receipt is acknowledged at district and despatched to wholesalers/retailers. Company submits bills on basis of receipts at districts. The bill is signed by company representative and CA. 95% (Urea) subsidy and 85-90% (P&K) subsidy is released within 2 months. Remaining 5% (Urea) subsidy and 10-15% (P&K) subsidy is released after (a) retailer’s acknowledgement on mFMS and (b) issuance of B1 and B2 certificates from state Government. Slide14 1 2 3 4

15. Department of Fertilizers Re-engineered Payment Process Slide15 Generation of Bills Seller To Buyer Sales Transactions IFD Concurrence Approval of Competent Authority Assessment 12 345 6 Recon & Funds Transfer Expenditure Statements Sync with iFMSPaymentDigital Sanction 7 8 91011 Processing by DDO Assess the monthly expenditure Head Wise for Pilot Districts on the basis of Supply Plan of the previous month with a variation (+/- 10%) Approval of Competent Authority to be taken for estimated Monthly expenditure “In-Principle” Concurrence of IFD will be obtained for monthly estimated expenditure for DBT districts as identified in Step -I Fertilizers sale transactions to be captured online using Biometric Authentication On 8 th, 16 th, 24 th and last day, company Representative to generate bills head wise. Weekly bills to be digitally signed and uploaded in iFMS Next day, Bills received to be processed and the claims added to be digitally signed by DDO DDO will issue a digital sanction for the admitted claim billed amount Once the digital sanction is received, PAO will pass the payment through PFMS PFMS Will give records to iFMS for the payments made System will generate weekly /monthly expenditure statements for the company and concerned departments. The Concerned departments (Urea & P & K) will initiate the process of reconciliation and recoup Heads by 20th of each month and ensure that the transfer of funds by 25th of each month by the concurrence of IFD.

16. Department of Fertilizers e-Sign (1/2) Slide 16 With e-Sign Service, any Aadhaar holder can digitally sign an electronic document without having to obtain a physical digital signature dongle. The need to obtain Digital Signature Certificate through a printed paper application form with ink signature and supporting documents will not be required. E Sign Deployment Requirements: 1.The Department should be a sub-KUA of e-Sign Service Provider. An agreement is needed to be executed between two parties. 2.The Department has to deploy hardware and software for deployment of e-KYC service across various delivery channels. For biometric authentication, these should be STQC certified biometric scanners as per UIDAI specification. 3.The Department has to develop a software application that should integrate both eSign API and eKYC API as per the eSign API specifications issued by the Controller of Certifying Authorities and eKYC API specifications defined by UIDAI. 4.The users should have 12 digit Aadhaar Number. For OTP based authentication, the mobile number should be registered with Aadhaar Database.

17. Department of Fertilizers e-Sign (2/2) Slide 17 List of Providers for e-Sign 1.eMudhra Ltd. 2.C-DAC 3.(n)Code Solutions Process Flown

18. Department of Fertilizers Action Plan- Dry Run in 2 Districts Slide18  A dry run will be conducted in Krishna and Godavari districts during month of September.  Both these districts will deploy “Modified DBT Application” in PoS devices.  Deployment of application will start from 8 th Sep 2016 and will be completed by 16 th Sep 2016.  The representatives of Fertilizer companies will procure biometric device for these districts by 12 th Sep 2016.  On 16 th, 24 th and 30 th Sep, the company representative will verify and e- sign digitally. ( NIC will ensure that the electronic bills are ready based on sale transactions)  On next working day, the DDO will verify and digitally e-sign the bills and send it to PO for payment. However, no payment will be made during dry run.

19. Department of Fertilizers Action Plan – Remaining 14 Districts Slide19 All preparatory activities to be completed by 30 Sep 2016. ActivityDateOwnership Procurement of devices 30 Sep 2016Company Preparation of devices 10 Oct 2016Company and NIC Deployment of devices in field 25 Oct 2016Company Training of Master Trainers 20 Oct 2016NIC Training of retailers 25 Oct 2016Company, District Administration Dry run01 Nov 2016Company Go Live01 Dec 2016Company

20. Department of Fertilizers Information to be captured at PoS device Slide20 Information captured by Retailer  Buyer Name-M  Father’s name-M  Mobile Number-M  Aadhaar Number-M/O  Voter/KCC-M/O  Address-O  Land details- O  Soil Health Card –O  Type of Fertilizers-M  Quantity of Fertilizers- M  MRP of Fertilizers-M  Name of the Plant-M  Name of the company-M Sale Information Buyer Information M- Mandatory O- Optional If Aadhaar number is available, the buyer will be authenticated with UIDAI with e-KYC service. Mobile number is mandatory. If mobile number is not available, the buyer will be asked to share mobile number of his family member.

21. Department of Fertilizers Key Stakeholders 1.District Administration 2.Fertilizer Companies (LFS) 3.Technology Partner (NIC) 4.Owner (DoF) 5.FAI Slide21 Stakehold ers 1 5 4 2 3 Dept of Fertilizers District Administration State Governments NIC FAI/ Fertilizer Companies The success of pilot will depend on close coordination among all stakeholders, robust monitoring and evaluation mechanism, and setting up of a professional team.

22. Department of Fertilizers Roles and Responsibilities –District/State (1/2) Pre Pilot Activities 1.Ensure 100% Aadhaar penetration in DBT districts. 2.Procurement of PoS devices through LFS as per specification approved by NIC. NIC specifications are available at http://mfms.nic.in/ (by 30 Sep 2016)http://mfms.nic.in/ 3.Seeding of Aadhaar number in soil health card data base. In case issuance of Aadhaar enabled soil health card is likely to take more time, ensure district soil profile is prepared which would enable districts to issue generalized “fertilizer use” recommendation to farmers. 4.Aadhaar seeding in land records. 5.Constitute “DBT working group” comprising of all stakeholders at District Level. 6.Ensure through fertilizer companies/State Agriculture Department that dealer’s list uploaded on mFMS is latest/correct. (This is important as sale through retailers who are not registered on mFMS may not be accounted for subsidy calculation). 7.Ensure that the stock position at company warehouse and retailers are always updated in mFMS. 8.Provide details of district/block /mandal officer to NIC along with mobile number, so that login can be created for them to access their mFMS portal. 9.Set up grievance redressal mechanism. Slide22

23. Department of Fertilizers Roles and Responsibilities –District/State (2/2) During Pilot Activities 1.Preparation of PoS devices (installation of software etc) in accordance with NIC instructions (Instructions available at http://mfms.nic.in/ ). (by 10 Oct 2016)http://mfms.nic.in/ 2.Deployment of PoS devices at retailer outlets. (by 25 Oct 2016) 3.Conduct training of all retailers at district level in association with LFS and NIC. (Master trainers will be trained by NIC). (by 25 Oct 2016) 4.Dry run of DBT Pilot followed by full scale implementation. (on 01 Nov 2016) 5.Conduct weekly meetings of DBT Working Group. Slide23

24. Department of Fertilizers Roles and Responsibilities – FAI/Companies Pre Pilot Activities 1.Procurement of PoS devices/tablets and installation of application as per instructions issued by NIC. (http://mfms.nic.in/ ). (by 10 Oct 2016)http://mfms.nic.in/ 2.Deployment of PoS devices/tablets at retail points. (by 25 Oct 2016) 3.Depute a nodal officer for each district for coordination with the ministry. 4.Arrange district level workshops with retailers. (by 25 Oct 2016) 5.All sale transactions (Company to wholesaler or retailer) must be entered online on real time basis. 6.Arrange Digital Signature (e-sign may also used) for Authorized Signatories of each plant. 7.Sensitize the field officer in district regarding implementation of DBT. 8.Complete a network survey of all retail points for connectivity assessment. 9.Availability of Aadhaar for all retailers. During Pilot Activities 1.Periodic monitoring of pilot. 2.Coordination with device vendor and NIC to sort out hardware/software issues. 3.Periodic reporting to DoF and District Collector. Slide24

25. Department of Fertilizers Roles and Responsibilities – NIC (1/2) Pre Pilot Activities 1.Finalize Specification for PoS/Tablet and share with all stakeholders. 2.Develop software application for PoS/Tablet/Web and ensure that field testing is completed. 3.Development of Web-based software as per the SoP designed for payment of subsidy. 4.Develop software application or MIS on Key Performance Indicators. 5.Ensure authentication services are up and running from UIDAI CIDR. 6.Set up a web based help desk for DBT. 7.Set up online complaints/grievance/suggestions management system. 8.Prepare training manual for operators on using PoS device. 9.Separate VM for DBT Data Base. 10.Develop DBT dashboard for DoF. Slide25

26. Department of Fertilizers Roles and Responsibilities – NIC (2/2) During Pilot Activities 1.NIC DIO to ensure that all PoS application related issues are resolved within one working day. 2.NIC DIO to support district administration in PoS device training to new operators. 3.Ensure continued support to retailers through telephonic helpdesk and online support. 4.Share MIS report of all pilot districts on daily basis to all stakeholders. Slide26

27. Department of Fertilizers Roles and Responsibilities – DoF Pre Pilot Activities 1.Preparation of Standard operating procedure (SOP) for weekly payment of subsidy to manufacturers on sale of fertilizers through PoS devices. 2.Develop Bill Format, Sanction Order format as per the SoP designed. 3.Letter to State Agriculture Departments regarding DBT. 4.Letter to FAI and Fertilizer companies for procurement and installation of PoS devices. 5.Deployment of PMU at the ministry and pilot districts. 6.DoF may become KUA (KYC User Agency) with UIDAI. 7.Workshop with District Collectors, Fertilizer Companies, NIC and FAI. 8.Creation of e-Mail group of DOF and District Collectors. 9.Separate email account for DBT. 10.Provide the Vessel-wise subsidy amount for imported urea from 2016-17 which will be provided on the bill issued to buyer. During Pilot Activities 1.Coordination with all stakeholders for smooth running of pilot. 2.Collecting feedback and taking corrective action. 3.Weekly meetings with all stakeholders. Slide27

28. Department of Fertilizers Way forward Slide28 The success of pilot will be identified with following Key Performance Indicators: Capturing of unique electronically authenticated buyer profile and transactions details using electronic/Biometric authentication of fertilizer Buyer using Aadhaar Based Verification and Soil Health Records based verification Capturing Satisfaction levels of Farmers, Retailers and Wholesalers using third party survey agency Capacity building for retailers and wholesalers to enhance the acceptance levels of usage of electronic modes Best practices identified for Network Connectivity After completion of pilot project, the DBT will be rolled out state wise. The states with high Aadhaar penetration, Aadhaar seeded land records and good connectivity will be first ones for state wide roll out.

29. Department of Fertilizers Aadhaar saturation (as on 17 Aug 2016) Slide29 State/UT NamePopulationAadhaar GeneratedPercentage Generated Delhi1675323519967689119% Haryana2535308126655388105% Punjab2770423628923261104% Himachal Pradesh68565097098734104% Chandigarh10546861079320102% Kerala3338767734129803102% Andhra pradesh8466553385973148102% A&N Islands379944383118101% Puducherry12444641247108100% Goa1457723144502399% Lakshadweep644296369399% Tripura3671032359143898% Sikkim60768858655297% Maharashtra11237297210693935495% Jharkhand329662383127328895% Madhya Pradesh725975656746505193% Chhattisgarh255401962371838193% Dadra & Nagar Haveli34285331301691% Karnataka611307045541262591% Uttarakhand10116752901014889% Tamil Nadu721389586388121289% Rajasthan686210125992432087% Gujarat603836285152482185% Daman & Diu24291119591481% Uttar Pradesh19958147715879610180% Odisha419473583301191079% West Bengal913477366902801576% Bihar1038046377222186370% Manipur2721756177088665% Jammu & Kashmir12548926803544064% Nagaland1980602108132555% Arunachal Pradesh138261172706153% Mizoram109101448125044% Meghalaya29640071459315% Assam3116927214564325% Grand Total1210193422102755861985%

30. Department of Fertilizers Thank You Slide 30