New Delhi: The finance ministry has given in-principle approval to provide Rs 1,400 crore in cash to fertiliser companies for reimbursing the losses incurred by them while selling bonds issued by it in lieu of subsidies.
“The finance ministry has given its in-principle approval to reimburse Rs1,400 crore in cash to fertiliser companies. The proposal is, however, yet to be cleared by Cabinet Committee on Economic Affairs (CCEA),” a fertiliser ministry official told PTI.
The finance ministry had issued bonds worth Rs27,500 crore in 2007-08 and 2008-09 fiscals to fertiliser firms against subsidies.
But, fertiliser firms failed to either encash them or gain any profit out of selling them as the rate of interest increased leading to a fall in the value of the bonds.
Since subsidy is provided only after the actual sales, fertiliser firms have failed to utilise the unused fund to enhance their businesses. They are also loosing on interests.
The official said that though the in-principle approval by the finance ministry was accorded more than five months back now, CCEA is yet to clear the proposal and it may take another one to two months.
The finance ministry is yet to issue any bond so far for the current fiscal year, he added.
Government had provided Rs43,319.31 crore fertiliser subsidy in 2007-08, Rs99,494.72 crore in 2008-09 and in the 2009-10 fiscal, it was Rs64,031.94 crore. fertiliser subsidy bill in the first quarter of current fiscal stood at nearly Rs8,900 crore.