Govt to release second part of fertiliser subsidy

The government today decided to release Rs 22,000 crore as the second tranche of fertiliser subsidy for 2008-09.

The amount will be raised through bank loans by the Department of Fertilisers and used to clear the monthly subsidy dues of fertiliser companies.

Chemicals and Fertilisers Minister Ram Vilas Paswan said the payment would be in cash. This is the second tranche of fertiliser subsidy, the first being the Rs 30,986 crore provided in the Union Budget 2008-09. Reacting to the news, stocks of leading fertiliser companies like Rashtriya Chemicals and Fertilisers, Nagarjuna Fertiliser and Chambal Fertilisers were among the top gainers at the Bombay Stock Exchange today.

The grant has come at a time the department has exhausted almost the entire Rs 30,986 it was allocated this year. The decision has come at the right time for fertiliser companies as they are heavily dependent on subsidy reimbursements to meet their working capital requirements.

The fertiliser department had earlier sought the finance ministry’s approval to sanction Rs 66,453 crore as supplementary grant as the budgetary allocation was sufficient clear only the July subsidy bills.

Subsidy accounts for over 80 per cent of the retail price of fertilisers.