Govt to issue Rs7,500 cr fertilizer bonds by Nov-end

Govt to issue Rs7,500 cr fertilizer bonds by Nov-end

New Delhi: The government would issue bonds to the tune of Rs7,500 crore to fertilizer companies by the end of this month against the subsidy bill, estimated to reach nearly Rs48,000 crore in the current fiscal.

“The fertilizer subsidy has increased from Rs11,835 crore in 2003-04 to Rs39,191 crore in 2007-08. If we include the arrear of last year, it would go up to over Rs47,000 crore," Chemicals and Fertilizers Minister Ram Vilas Paswan told reporters at the Economic Editors’ conference.

Government has decided to give bonds to fertilizer firms such as IFFCO and KRIBHCO to compensate them for selling the products at subsidized rates to farmers.

Paswan said the government has already met maximum demand of fertilizer subsidy bill.

“Out of 7,000 crore worth fertilizer subsidy, about 7,000 crore have already been approved while the remaining 10,000 crore will be cleared in the second supplementary (grants for the ministry)," he said.

Asked about the fertilizer bond, the minister said it would come by the end of November, 2007.

Later, the fertilizer secretary J S Sarma informed that the ministry was in consultation with the Finance Ministry to determine the terms of bond.

The total fertilizer subsidy requirement for 2007-08 is estimated at Rs47,979 crore, including Rs8,788 crore as carryover from last year. The Centre provided for over Rs22,000 crore in this year’s budget for subsidy and about Rs15,000 crore was cleared in August in the first supplement.

The minister also informed that a consensus has been evolved to introduce nutrient-based subsidy on fertilizers. The policy is expected to come by the end of 2007. It would allow other nutrients to receive subsidy besides the NPK available in urea, DAP and MOP.