The government has lowered the fertiliser subsidy marginally to Rs Rs 65,971.50 crore in the next fiscal, a move criticised by industry body FAI claiming that it will hamper payments in 2013-14 as there is already huge outstanding amount due in the current fiscal.
Criticising the move, industry body Fertiliser Association of India (FAI) said the amount is less compared to the subsidy payments due for this fiscal as well as the payments for 2013-14 financial year.
"This amount will not be enough as there are already huge outstanding bills to the tune of about Rs 30,000 crore pending for 2012-13 and if we add to it the real requirement for the next fiscal, then this amount will not do," FAI Director General Satish Chander told PTI.
Under the subsidy, government would provide Rs 15,544.44 crore for imported urea, Rs 21,000 crore for indigenous (urea) fertiliser and Rs 29,426.86 crore for the sale of decontrolled fertilisers (DAP, MOP and complexes).
Facing an acute cash crunch, the Fertiliser Ministry has arranged for Rs 5,000 crore bank loan for fertiliser companies who have not been paid full subsidy for about six months.
While loan would be taken by the companies, government will bear most of the interest they would have to pay for such borrowing.
The ministry has not paid subsidy bills for phosphatic and potassic (P&K) fertilisers like muriate of potash (MoP) and di-ammonium phosphate (DAP) since July and for urea since August.
On an average, India consumes about 30 million tonnes of urea and around 25-26 million tonnes of DAP, MoP and complex fertilisers annually