The Hindu Business Line : Fertiliser subsidy: Most payouts marked for urea importers

Since Rs 54,000 cr is already being arranged for, around Rs 65,000 cr has to be provided through supplementary grants by beginning of November to meet total subsidy shortfall.

Ambarish Mukherjee

New Delhi, Sept. 13 Majority of the fertiliser subsidy disbursed in cash out of the Rs 22,000 crore corpus announced by the Union Government three weeks ago in August 20 has gone towards imported urea, while a number of domestic producers have been waiting for their bills to be reimbursed.

Fertiliser manufacturers said out of the Rs 22,000 crore fund, till now only around Rs 6,000 crore had been disbursed and most of it has been given to importers of urea because foreign suppliers mandatorily seek advance payment before shipments.

Urea is imported only through Government agencies. Some of the bills of domestic urea manufacturers are pending for more than four months now, industry officials said.

The average subsidy for domestic urea is in the range of Rs 13,000-14,000 per tonne while for imported urea the amount stands in the range of Rs 22,000-23,000 per tonne.

The cash provision was made despite objections from the Ministry of Finance which was of the view that subsidy be paid to banks through bonds. But banks were not willing as they would have to sell the bonds at a discount, the Minister for Fertiliser, Mr Ram Vilas Paswan, had said on the day of the announcement.

Finally the Prime Minister had to take a personal initiative to convince the Finance Ministry to release the fund in cash directly to the fertiliser companies, Mr Paswan pointed out.

Provision Estimate

The Minister had also said the cash provision has been made because the fertiliser subsidy bill for the year is now estimated to be around Rs 1.19 lakh crore for 2008-09 against a Budgetary provision of approximately Rs 32,000 crore.

It has been decided that the remaining amount would be provided for in the supplementary grant proposal during the monsoon session. Since Rs 54,000 crore (Rs 32,000 plus Rs 22,000) is already being arranged for, around Rs 65,000 crore has to be provided through the supplementary grants by the beginning of November in order to meet the total subsidy shortfall for the year, departmental officials pointed out.

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