There will be no budgetary constraints for subsidy receivables of domestic ship manufacturers including ABG Shipyard, Bharati Shipyard, and Larsen & Toubro in case their demands in 2011-12 exceed the budgeted amount of Rs 542.12 crore.
Domestic shipyards anticipate that their subsidy demands would be in the range of Rs 700 crore in 2011-12, a source from Shipyards Association of India told Business Line .
This also reflects expectations of Indian shipyards to improve on deliveries next year as subsidy payouts are linked to payment and delivery milestones.
?If the demands are higher, there will be no budgetary constraint and funds can be made available through authorisation. The companies can also expect faster disbursals of their pending subsidy demands for orders booked before August 15, 2007. The process has now been streamlined,? Mr K. Mohandas, Secretary, Ministry of Shipping, told Business Line.
There was a drop in disbursal of subsidy to companies in 2008-09, 2009-10 (refer to table) because of a pending Cabinet approval. Also, on the back of recent slowdown, shipowners asked the shipyards to delay the deliveries, which in turn slowed the pace of subsidy outgo from Government.
SUBSIDY SCHEME
The Cabinet Committee on Economic Affairs (CCEA), in March 2009, gave its nod to disburse Rs 5,100 crore as outstanding subsidy to Indian shipbuilders for orders booked till August 14, 2007.
The subsidy was provided to the extent of 30 per cent of contract price of orders, subject to certain conditions such as price discovery through competitive bidding. The Government hopes to disburse about Rs 850-900 crore cumulatively by March 31.
CLAIMING PROCESS
After the CCEA nod in 2009, the Ministry issued revised guidelines on September 29, 2009. The companies have to get a certificate of price reasonableness from the DG Shipping. For public sector shipyards, the subsidy is payable when they receive stage payments from customers. For private sector shipyards, the subsidy is payable after the delivery of the vessel.
?We have to ensure genuineness of the claims by shipyards; the price discovery should have been through an international competitive bidding. Now, that the process is in place, we are likely to see faster claims processing,? Dr S.B. Agnihotri, DG-Shipping, told Business Line recently.
mamuni@thehindu.co.in