Gets Rs 9,000 cr under special banking arrangement to clear pending dues
The Fertiliser Ministry has sought an additional subsidy of Rs 20,000 crore from its finance counterpart. This is besides the second special banking arrangement of Rs 9,000 crore to clear the pending subsidy dues of the fertiliser companies for the current fiscal.
“We have sent our demand for additional subsidy to be included in the third and final supplementary demand for grants,” a senior Fertiliser Ministry official told Business Line.
It will be brought before Parliament during the forthcoming session. The Government had provided Rs 70,586 crore for fertiliser subsidy in 2013-14 against a demand of Rs 1.05 lakh crore by the Department of Fertilisers. A subsidy of Rs 41,158.85 crore was allocated for urea and Rs 29,426.88 crore for phosphatic and potassic (P&K) fertilisers. The official said the urea subsidy was exhausted after making payments till July, while the provision for P&K fertilisers had been utilised by December-end for making payments till September. To tide over the problem, the Fertiliser Ministry sought assistance.
The Finance Ministry has approved a special banking arrangement of Rs 9,000 crore against the demand for Rs 10,000 crore to help companies tide over the cash crunch. The Fertiliser Ministry is now talking to various banks for tie-ups.
“We are talking to public and private sector banks, both,” the official said. It is expected that credit will be made available at 10.7 per cent rate of interest, while the duration of the credit will be 120 days. The principal amount is to be repaid out of the money provided in the supplementary demand for grants.
In September 2013, the first special banking arrangement of Rs 5,500 crore was made available to fertiliser companies, though the demand was Rs 12,000 crore. Then, Government-owned banks provided short-term credit for 60 days. The rate of interest was 10.7 per cent out of which the Government was to bear 8 per cent while the remaining by the companies.
For repayment of this, the Finance Ministry provided a cash outgo of Rs 2,000 crore as additional subsidy in the second supplementary demand for grants as approved by Parliament last month. It was also said another Rs 3,500 crore was to be met through savings on other types of fertilisers.
An increase in subsidy is due to rise in cost of imported fertilisers due to the rupee’s depreciation against the US dollar. At the same time, an outstanding amount of Rs 22,000 crore was carried over from 2011-12 to 2012-13.
The backlog for 2012-13 was higher at Rs 32,000 and has to be paid from this year’s allocations.