Aiming to plug subsidy leakages, government on Saturday said it would roll out mobile-based tracking system of fertilisers across the country and announced plans to provide subsidy directly to retailers and then to farmers in a phased manner.

At present, the fertiliser subsidy, pegged at Rs 60,974 crore for next fiscal, is being disbursed to manufacturers.

In his budget speech, Finance Minister Pranab Mukherjee also proposed cut in import duty of fertiliser machineries and some water soluble fertilisers and liquid fertilisers, other than urea.

That apart, the government has provided tax incentives on external commercial borrowings (ECB) and capital expenditure.

"The recommendations of the task force headed by Shri Nandan Nilekani on IT strategy for direct transfer of subsidy have been accepted," Mukherjee said in his budget speech.

Based on Task force suggestions, he said a mobile-based Fertiliser Management System will be "rolled out nation-wide during 2012" to track movement of fertiliser from manufacturer to retail level.

"Direct transfer of subsidy to the retailer, and eventually to the farmer will be implemented in subsequent phases. This step will benefit 12 crore farmer families, while reducing expenditure on subsidies by curtailing misuse of fertilisers," he noted.

Reacting on the proposal, Co-operative fertiliser major IFFCO Managing Director U S Awasthi told PTI: "We have been requesting for a system of direct transfer of subsidy for the past 6 years and it (mobile-based tracking system) is the first step towards empowering farmers".

On high subsidy level, the Finance Minister observed that "major subsidies are for food, fertilisers and petroleum products. Some subsidies at this juncture in our development are inevitable. But they become undesirable if they compromise the macroeconomic fundamentals of the economy, more so, when they don't reach the intended beneficiaries".

The government has pegged the fertiliser subsidy for the next fiscal lower by 9 per cent to Rs 60,974 crore.