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India:Special banking arrangement likely for fertiliser subsidy payouts
Dec. 8, 2016
Facing fund crunch for subsidy payments to fertiliser firms, the ministry of chemicals and fertilizers may propose a special banking arrangement (SBA) for settlement of outstanding subsidy bills of manufacturers during the current financial year.
The department of fertilisers may soon write to the finance ministry seeking approval for SBA.
According to a statement issued by the Press Information Bureau on 14 October 2015, the Cabinet Committee on Economic Affairs had approved for SBA for a loan of Rs.7,000 crore with the consortium of public sector banks led by State Bank of India and Punjab National Bank for settlement of outstanding indigenous urea subsidy bills of fertiliser companies in 2014-15.
“The ministry has already demanded for additional amount under second supplementary grants. However, we have not heard of any final decision on that. Hence, we are looking forward to write to the finance ministry regarding a special banking arrangement to take care of the pending subsidy payments,” said a senior government official on condition of anonymity.
InfraCircle on 26 October reported the ministry of chemicals and fertilizers sought an additional allocation of Rs.20,000 crore from the finance ministry for fertiliser subsidy payment.
subsidy-outgo
Another government official, who also did not want to be named, said around Rs10,000 crore is left over from the total budgetary expenditure of around Rs.74,000 crore.
“We plan to write to the finance ministry soon for setting up a special banking arrangement with state-run banks to meet subsidy payments. We are still working on the loan amount, which needs to be finalised under SBA,” said the second official quoted above, adding a lot will depend on whether the demand made under supplementary grants are being met or not.
Fertiliser secretary Vijay Shankar Pandey had said the fertiliser subsidy budget for the current financial year stands at Rs.75,000 crore and the ministry has asked for additional Rs.20,000 crore from the finance ministry under supplementary grants.
Queries emailed to the spokespersons of the ministry of chemicals and fertilizers, and the finance ministry on 6 December remained unanswered.
Experts think that special banking arrangement should come with interest waiver.
“Interest rate of 2% under special banking arrangement should be waived as it will be another set back for the industry,” said U.S. Jha, former chairman and managing director of Rashtriya Chemicals and Fertilizers Ltd.
Also, DBT in Fertilizer will further delay subsidy payments, he added.
Source: vccircle fertilizer
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