Faced with a severe liquidity crisis, the fertiliser industry has urged the Government to immediately allocate an additional Rs 40,000 crore to clear the subsidy dues for the current fiscal.
“It is high time the Government takes note of this issue,” said R.G. Rajan, Chairman, Fertiliser Association of India (FAI), the apex body of nutrient makers, while demanding that immediate steps be taken to help resolve the payment crisis faced by the industry.
Further the Government should make adequate budgetary allocation for 2014-15 keeping in view the realistic estimate for the year and the backlog if any, carried forward from 2013-14, Rajan said ahead of FAI’s three-day annual industry conference that starts on Wednesday.
Pegging the subsidy requirement at Rs 1.07 lakh crore for the current fiscal including the arrears of Rs 32,000 crore, FAI Director-General Satish Chander said the subsidy for the indigenously manufactured urea has already been exhausted.
Subsidy allocation
The Government had allocated Rs 65,971 crore subsidy for the current fiscal, marginally lower than the previous year.
Of this, Rs 15,544 crore was earmarked for imported urea, Rs 21,000 crore for domestically produced urea and the rest for decontrolled fertiliser complexes such as di-ammonium phosphate and muriate of potash (MoP), among others.
Further, the Government should also make provision for providing interest on delayed payment of subsidy and freight bills beyond the prescribed time-limit of 45 days, Chander said.
Banking arrangement
The Government has recently made a banking arrangement of Rs 5,500 crore as part of which fertiliser companies will get short-term credit from banks at a lower interest rate to partially address the payment crisis.
Further, the Government is also considering an additional Rs 10,000 crore more under the special banking arrangement against the subsidy due for the current year.
Rakesh Kapur, Joint Managing Director, IFFCO, said the Government should implement the new investment policy notified on January 2, 2013 without any further delay.
Gas allocation policy
He also said that the gas allocation policy be revisited to remove the cap imposed on the supply of domestic gas to fertiliser sector and top priority accorded in gas utilisation policy 2008 be restored not only for existing units, but also for new investments.