The Cabinet Committee on Economic Affairs, headed by Prime Minister Manmohan Singh, is likely to discuss the issue of buying back of fertiliser bonds issued by the government to the manufacturing firms in lieu of subsidies.
The government had issued bonds worth Rs 27,500 crore in 2007-08 and 2008-09 to fertiliser companies against subsidies.
But, fertiliser firms failed to either encash them or gain any profit out of selling them as the rate of interest increased leading to a fall in the value of the bonds. Even the fertiliser firms had demanded the Centre to buy back the bonds.
According to sources, CCEA is likely to take a decision on the Fertiliser Ministry's proposal for buy back of these bonds.
The finance ministry had last year given its in-principle approval for buying back fertiliser bonds, with reimbursement of Rs 1,400 crore in cash to fertiliser companies, they said.
Since subsidy is provided only after the actual sales, fertiliser firms have failed to utilise the unused fund to enhance their businesses. They are also loosing on interests.
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The government had provided Rs 43,319.31 crore fertiliser subsidy in 2007-08, Rs 99,494.72 crore in 2008-09 and in the 2010-11 fiscal, it was Rs 55,000 crore.
The fertiliser subsidy bill for the 2011-12 fiscal is estimated at Rs 50,000 crore.