Fertiliser ministry seeks more for sops bill

The fertiliser ministry has approached Prime Minister Manmohan Singh on the issue of the Budget outlay for subsidies falling short by Rs 12,000 crore.

"The unpaid dues amount till last financial year (2005-06) amount to Rs 6,000 crore. This year's outlay is short by another Rs 6,000 crore. The ministry has approached Finance Minister P Chidambaram and written to the prime minister," Chemicals and Fertiliser Minister Ram Vilas Paswan had said recently.

Commenting on the phosphoric acid pricing policy being worked out by the Abhijit Sen Committee, Paswan said, "The committee has submitted its report, which has some legal problems. For example, it does not address the issue of subsidy vis a vis the World Trade Organisation (WTO). The matter has been sent back to the committee."

The pricing policy had lapsed on March 31 this year and with no new policy in place, the industry is confused over the issue of subsidy.

Apart from the phosphoric acid pricing policy, the Abhijit Sen committee was working on linking the indigenous price mechanism with international prices of phosphatic fertilisers, to decontrol the sector.

The minister said till the new policy came into force, the old one would apply. "The government would examine alleged misuse of subsidy or if, in view of the industry's demand, the amount of subsidy should be raised," he added.

World prices of potash and phosphoric acid have been rising for the last two years. The current international freight-on-board price of potash is over $300 a tonne as against $220 last year and $120 the year before that. India imports all its potash and phosphate inputs for the fertiliser industry.

Thus, amid rising international prices, the issue of unpaid dues is hurting producers of urea as well as decontrolled phosphatic fertilisers.

The total subsidy dues at the end of 2004-05 fiscal were estimated at Rs 3,800 crore. These have since grown to Rs 6,000 crore. The industry's concern has aggravated as last two budgets have failed to allocate funds for clearing these arrears.

The provision for fertiliser subsidy in the 2006-07 Budget is only Rs 17,253 crore, the same as the revised estimate for 2005-06.

Last year, the Fertiliser Association of India (FAI) had sought an additional allocation of Rs 6,000 crore (on top of the 2005-06 budgetary provision of Rs 16,254 crore for fertiliser subsidy) to facilitate clearance of dues. Against this demand, the government provided only Rs 999 crore via supplementary grants.