Government’s fertiliser subsidy of Rs 66,000 crore this year could fall short of the actual requirement because a part of the allocation would be used to clear dues of last year, according to a report.

The budget provision for the fertiliser subsidy in 2013-14 is maintained at last year’s level of Rs 66,000 crore.

“However, this (budgetary provision) is likely to fall short as a part of the 2013-14 budget will be used to clear 2012-13 dues,” India Ratings and Research, a part of Fitch ratings group, said in a report.

The subsidy dues are estimated to be around Rs 34,000 crore for the last fiscal. The government had a budget provision of Rs 66,000 crore as against the total subsidy bill of Rs 1,00,000 crore for 2012-13, it said.

The report cautioned that delay in clearing subsidy dues this year would lead to increase in short-term borrowings by the fertiliser companies.

“Accumulation of subsidy receivables lead to higher-than-expected working capital borrowings by affected fertiliser companies in 2012-13,” the report said.

Fertiliser companies reported carry forward of subsidy dues during September 2012 to March 2013, which the government started liquidating from April onwards.

The rating agency said it has given the ‘stable outlook’ for public and private sector fertiliser firms for the second half of this fiscal. However, the outlook could be revised negative if the government subsidy is either inadequate or delayed.

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