Agristack: A Phased Approach to Controlling Fertilizer Subsidy

Finance Minister Nirmala Sitharaman has emotionally described the digital infrastructure being developed for the agriculture sector, “Agristack,” as the “next UPI.” However, the concept of Unified Payments Interface (UPI) is relatively simple—it connects users’ bank accounts to a digital payment system and is accessible through apps such as Google Pay or PhonePe. In contrast, Agristack is a far more ambitious and complex initiative. It will truly test the administrative and IT capabilities of both the central and state governments.

The objective of Agristack is to create digital IDs for nearly 110 million farmers in India and develop three major databases: Farmer registration, Land records, Crop data. The aim is to provide farmers with direct access to benefits and services with minimal paperwork, eliminating the need to repeatedly visit service providers.

The central government approved this project in September 2024. So far, 86.2 million farmer IDs have already been created, and the target is to complete the process by March 2027.

For Agristack to succeed, accurate and granular data collection is essential. In many parts of the country, progress has been made in digital mapping of agricultural land using drone technology, but identifying actual land ownership remains complex. About 20% of farming households cultivate land on lease or sharecropping arrangements, while the actual landowners often live in cities or even abroad.

Fertilizer Subsidy and Soil Health Improvement Data indicates that around 60% of fertilizer use occurs on land not registered in the name of the farmers who cultivate it.

For the upcoming financial year, the fertilizer subsidy budget exceeds ₹1.7 lakh crore. By integrating land, crop, and fertilizer usage data, the government can better control subsidy expenditure while also improving soil health.

Experiments with Agristack in Haryana have already shown significant savings by linking land records with fertilizer usage and crop data. Notably, there has been a reduction in urea consumption, which had been excessively used due to heavy subsidies.

Policy Shift in Fertilizer Subsidy Distribution Agristack could introduce a major policy shift in fertilizer subsidy distribution, where subsidies are given directly to farmers instead of fertilizer manufacturers.

While on one hand, Direct Benefit Transfer (DBT) would increase transparency and allow subsidies to be adjusted more accurately based on actual usage. On the other hand, it would also help curb the black marketing of urea.

Suresh Bahety

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