Finmin no to Rs9,000 crore for fertilizer subsidy dues

Finmin no to Rs9,000 crore for fertilizer subsidy dues

New Delhi: The finance ministry has, for the moment, not accepted the chemicals and fertilizers ministry’s demand for an additional Rs9,000 crore, aimed at clearing the fertilizer subsidy dues for 2007-08.

“We are disappointed about our demand (for Rs9,000 crore) not being accepted, but one must remain hopeful. We will be trying to convince the finance ministry in order to get at least some amount reallocated to the department of fertilizers during the revised estimates meeting," a senior fertilizers ministry official, who did not wish to be identified, said.

The revised estimates meeting is chaired by the finance ministry and seeks to meet the additional demand of various ministries by re-allocating the surplus funds from other ministries as opposed to approving a fresh outlay.

The finance ministry did not include allocations to discharge the fertilizer subsidy dues in the second supplementary budget moved in Parliament on Tuesday. Supplementary budgets are brought out by the government when the expenditure allocated under a particular head is found insufficient for the fiscal year.

Finance ministry officials, who did not wish to be identified, said that the subsidy dues are likely to be included in the third supplementary budget, which is normally moved after the Union budget is presented on 29 February next year. Alternatively, it could spill over and be included in the budget proposals for 2008-09.

Fertilizer industry representatives expressed disappointment at the government’s decision. “We do not expect much from the revised estimates meeting as no new funds are being released. But the truth is that the industry is already facing a crisis with the lack of cash and any further delay in subsidy payments will be disastrous for us," said R.C. Gupta, deputy director general of trade body The Fertiliser Association of India (FAI).

The finance ministry had provided Rs15,000 crore in the first supplementary budget, in August, after its initial budget allocation of Rs22,451 crore proved inadequate for subsidy payments. Since 2004-05, the budgeted amount for fertilizer subsidy has consistently fallen short of the actual amount.

It is estimated that the actual fertilizer subsidy outgo will be Rs48,000 crore, more than double the budgeted amount.

The sharp rise in subsidy payments this year have primarily been due to the rise in the price of imported fertilizers and raw materials even as the domestic administered prices remained unchanged. In 2006-07, India imported 11.05 million tonnes (mt) of fertilizers while the total domestic output was 36.12mt.