Government keeps FY15 fertiliser subsidy at FY14 levels

Government has proposed keeping fertiliser subsidy for 2014-15 at about same level as last fiscal, a move which was criticised by the industry that is facing liquidity crunch because of delay in subsidy payments.

Finance Minister P Chidambaram today proposed keeping the subsidy on crop nutrients at Rs 67,970 crore for the financial year ending March 2015 compared to the revised estimate of about Rs 67,971 crore in 2013-14 fiscal.

Flaying the decision, Fertiliser Association of India (FAI) said the allocation was inadequate and will lead to companies shelling out more for payment of interest.

"Industry is not happy with the budget. The provisions are inadequate for the fertiliser industry. Both the revised estimates (RE) for this fiscal and the budget estimates (BE) of 2014-15 fiscal are not adequate," FAI director general Satish Chander told PTI.

This will lead to a large carryover of subsidy payment, he added.

"The industry will suffer. We already have liquidity problems and with this it will continue. Industry will have to shell out larger amount to pay higher interest to the banks," Mr Chander said.

Of the total fertiliser subsidy of Rs 67,970 crore in 2014-15 fiscal, subsidy for imported urea is pegged at Rs 12,300 crore, domestic urea is Rs 31,000 crore and sale of de-controlled fertilisers (like phosphatic & potassic fertilisers) is Rs 24,670 crore.

According to industry analysts, government has to pay subsidy dues to the tune of Rs 36,000 crore to companies which is affecting their cash flows. Profits of fertilisers firms could drop by as much as 30 per cent in this fiscal because of higher finance costs.