Fertiliser sector to get Rs 7,200 cr additional subsidy

Oil marketing companies will get additional subsidy of Rs 15,000 crore for 2011-12 while the fertiliser sector will receive an additional subsidy of over Rs 7,200 crore. These amounts have been provided in the third set of supplementary demands for grants tabled in Parliament on Monday.

The Government has sought approval from Parliament for additional net cash spending of over Rs 42,605 crore during the current financial year ending March 31. However, this additional net cash outgo is unlikely to impact the revised estimate of expenditure given in the Budget tabled on March 16.

While the Government's gross additional spending is pegged at Rs 4.30 lakh crore in the third supplementary, Rs 3.87 lakh crore will be generated through enhanced receipts and recoveries, the Government said.

With the latest demands for grants, the oil subsidy bill is set to touch over Rs 68,600 crore during current financial year. This is almost half of the total under recovery of Rs 1.37 lakh crore estimated. This will also bring some clarity on subsidy sharing formulae for the current year where under recovery is to be shared in the ratio of 50 per cent (Government), upstream companies such as ONGC, Oil India and GAIL (33 per cent) and oil marketing companies along with consumer (17 per cent).

Subsidy under the petroleum sector includes subsidies for domestic LPG and PDS kerosene, freight subsidy for far flung areas, under recoveries of oil marketing companies and other related compensation.

According to the Petroleum Ministry, for the fortnight starting March 1, 2012, under recovery (difference between the cost and selling price) on a cylinder of domestic LPG is estimated at Rs 439, on a litre of diesel Rs 12.04 and on a litre of kerosene Rs 28.54.

Part of the under recovery is borne by the Government and some by the upstream companies such as ONGC, Oil India and GAIL. This is in addition to a subsidy of Rs 0.82 per litre on PDS kerosene and Rs 22.58 per cylinder on domestic LPG, provided by the Government.

Fertiliser Subsidy

The total fertiliser subsidy has touched nearly Rs 71,000 crore. However, nearly Rs 3,800 crore is expected to be met from the savings from other ministries, so net cash out go on this front is estimated at Rs 67,200 crore. However, if we take gross subsidy, it would be nearly 41 per cent higher than Budget estimate for 2011-12.

Shishir.s@thehindu.co.in

(This article was published on March 19, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.