A subsidised drip quotation with an inflated invoice and a cash-back offer
Farmer: 2 ha cotton at Jalna, currently furrow-irrigated, 7.5 HP pump, electricity bill ₹18,000/year. Quotation: drip system ₹1,72,000 in total (₹86,000/ha): 16 mm laterals 13,333 m at ₹7.50/m = ₹1,00,000; sand and screen filter ₹22,000; main and submain ₹25,000; valves and fittings ₹9,000; labour and transport ₹16,000. Subsidy: the sanction letter states 45% of eligible cost for the general category, subject to the scheme ceiling; the calculated subsidy is ₹77,400 and the farmer's share is ₹94,600. Loan: 9% per annum for 5 years. Expected benefits per ha per year: yield rise from 12 to 14 q/ha at ₹7,200/q = ₹14,400; fertilizer saving ₹3,000; labour saving ₹4,500; energy saving ₹2,000; total ₹23,900/ha. Dealer: offers to prepare a second quotation for ₹2,20,000 so that a higher subsidy can be claimed, and to pay the difference back in cash. The dealer also wants the completion certificate signed before installation so that the first instalment is released. The borewell water EC is 0.9 dS/m; the dealer says no filter cleaning is needed because 'the water is sweet'.
1. Calculate the farmer's share, the EMI, the annual benefit and the simple payback. Advise whether the investment is viable.
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Total project cost ₹1,72,000. Subsidy 45% = ₹77,400; farmer share = ₹94,600. EMI at 9% for 60 months: r = 0.0075; EMI = 94,600 × 0.0075 × (1.0075)^60 / ((1.0075)^60 − 1) = about ₹1,964/month, or ₹23,568/year. Benefits = 2 ha × ₹23,900 = ₹47,800/year. Net cash flow before interest = 47,800 − 23,568 = ₹24,232/year. Simple payback on the farmer share = 94,600/47,800 = 1.98 years, about 2 years; with interest, the 5-year cumulative net is positive (5 × 47,800 − 5 × 23,568 = ₹1,21,160). The investment is viable if the yield and price assumptions hold. Stress-test: if the yield benefit is only 1 q/ha instead of 2, benefits fall by ₹14,400 to ₹33,400 for 2 ha, and payback becomes 2.8 years. Check the loan's processing fee and repayment schedule before signing.
2. Examine the dealer's offers and the quotation. Identify at least three problems and state what the farmer should do.
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Problems: (1) the dealer proposes an inflated quotation of ₹2,20,000 and a cash refund - that is subsidy fraud, not a discount; the farmer can lose the subsidy, face recovery and criminal action, and the dealer may not be empanelled. Refuse and report to the scheme agency. (2) Signing the completion certificate before installation is false certification; the farmer loses the right to inspect and to withhold payment for defects. Sign only after commissioning and a successful field test. (3) The quotation omits a fertilizer unit, pressure gauges, air release valve, flush valves, filter backwash plumbing and a maintenance visit; these are needed for a working system. Ask for an itemized, scheme-format quotation. (4) 'Sweet water' does not mean no filtration: EC 0.9 dS/m still carries salts, and silt or iron can clog drippers; sand and screen filters must be backwashed and cleaned. Verify the dealer's empanelment, GST invoice, warranty and service contact before paying any advance.
3. Prepare a documentation checklist for the subsidy claim and an after-sales plan. How would you handle a complaint that emitters clogged after one season?
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Documentation checklist: 7/12 extract or land record, Aadhaar, bank passbook, caste certificate if applicable, soil and water test report, layout plan with area and spacing, itemized quotation from an empanelled supplier, signed agreement, geo-tagged photographs before/during/after installation, measurement book, invoices, warranty cards, commissioning report with pressure and flow test, and the completion certificate signed only after the farmer has seen the system run. Keep copies of every subsidy document and check that the subsidy is credited to the farmer's own bank account. After-sales: log the clogging complaint with date, block, emitter flow and pressure; test water EC and iron, inspect the filter and backwash, check the pressure differential, and clean or replace emitters. Set a schedule: daily screen cleaning, backwash when the pressure drop exceeds 0.5 kg/cm², monthly flush of laterals, seasonal chlorination/acid treatment, and an annual service visit. Give the farmer a one-page logbook in Marathi and a phone number for complaints.