Fertiliser body concerned as subsidy dues payable to cos cross Rs 33,000 cr

Fertiliser industry body FAI has expressed concern over delay in payment of subsidy arrear that has reached Rs 33,691 crore and is estimated to reach Rs 60,000 crore by the end of this fiscal.

The Fertiliser Association of India (FAI) Director General Satish Chander demanded that the government should clear subsidy arrears at the earliest as delay in payments is hurting liquidity of manufacturers.

The government fixes the maximum retail price of urea and it reimburses manufacturers the differences between the MRP and production cost. The Centre also provides nutrient based subsidy (NBS) on non-urea fertilizers.

As per the information provided by 25 fertilizer companies, FAI said, a total of Rs 33,691 crore dues are pending as on November 1, 2019.

Out of this, Rs 20,853 crore is under DBT (Direct Benefit Transfer) and balance Rs 12,838 crore is other than DBT.

It also pointed out that Rs 20,434 crore dues are pending for which bills have been generated but not paid and the balance Rs 13,257 crore are pending for which fertilizer companies are not able to generate bills.

"Fertiliser subsidy arrear is likely to touch Rs 60,000 crore by March, if additional fund is not provided to the ministry through supplementary grant," Chander said.

The outstanding was Rs 39,000 crore at the beginning of 2019-20 financial year, he added.

FAI said that implementation of DBT assured weekly payment of subsidy.

"However, this assurance is not kept due to persistent budget constraints," it said in a statement.

Implementation of DBT has postponed subsidy payment by another 6 months because now it is linked to the sale of fertilizers through POS (point of sale) machines.

Earlier, subsidy used to be paid to manufacturers on receipt of material in the district.

"This has increased working capital requirement and interest cost," FAI said.

The government has allocated nearly Rs 80,000 crore to meet fertiliser subsidy, of which around Rs 56,000 crore pertained to urea and remaining about Rs 26,000 crore for nutrient based subsidy for non-urea nutrients.