India Goverment may allot Rs.70,000 crore towards fertiliser subsidy

The government is likely to allocate Rs.69,868 crore towards fertiliser subsidy in the upcoming budget 2017-18, according to sources close to the development.

 

In 2016-17, Rs.74,100 was allotted for fertiliser subsidy and a major chunk of the allotted money, Rs.43,356 crore, was used for clearing pending liabilities.

 

“A total of Rs.69,868 crore is likely to be allocated towards fertiliser subsidy during budget this year. Out of this, Rs.12,185 crore will be earmarked towards indigenous potassic and phosphatic fertilisers, while Rs.37,000 crore will be for indigenous urea,” said a senior government official. The department of fertilisers had sought Rs.80,000 crore towards subsidy from the finance ministry.

 

A second government official, who did not wish to be named, said Rs.9,768 crore may be allotted towards imported urea and Rs.7,900 crore for imported P&K fertiliers. “A sum of Rs.3,000 crore is likely to be allotted for freight subsidy,” the second official quoted above said.

 

The fertiliser ministry has sought  Rs.20,000 crore from the finance ministry under a special banking arrangement (SBA) to clear the pending dues of the fertiliser firms for the current financial year.

 

According to information provided by the department of fertilisers, total pending dues of fertiliser firms are Rs.30,000-Rs.35,000 crore and hence some arrangements need to be put in place for making payments.

 

Queries emailed to ministries of finance and chemical and fertilisers on 10 January remained unanswered.

 

This gains importance as the government is also planning for a nationwide rollout of direct benefit transfer (DBT) in fertiliser sector from April, for which a pilot project is already on in 16 districts across the country.

 

The government was working aggressively for the nationwide launch of DBT of fertiliser subsidy from the start of next financial year. However, non-availability of point-of-sale (PoS) devices may impede the ambitious project.

 

India’s annual consumption of urea is around 31MT, out of which 24 MT is produced domestically, and the rest is imported. To enhance the production of urea indigenously, the government has approved the revival of Talcher (Odisha) and Ramagundam (Telangana) units of Fertilizer Corp. of India Ltd (FCIL) by PSUs through nomination route.
 

Also, the government has approved revival of two closed units of FCIL at Sindri (Jharkhand) and Gorakhpur (Uttar Pradesh), and the Barauni (Bihar) unit of Hindustan Fertilizers Corp. Ltd (HFCL) via consortium of PSUs, including NTPC Ltd, Coal India Ltd (CIL) and Indian Oil Corp. Ltd (IOC).