'Fertiliser subsidy may exceed budget estimate by $7.4 bn'

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SME Times News Bureau | 25 Jan, 2013
Country's fertiliser subsidy burden is likely to overshoot the budgetary estimate by at least Rs.40,000 crore (USD 7.4 billion) to Rs.1 lakh crore in the financial year ending March 31, top officials of the Fertiliser Association of India (FAI) said Friday.

Satish Chander, director general of Fertiliser Association of India (FAI), told reporters in New Delhi that the budgetary estimate for the fertiliser subsidy was not realistic as the actual burden is likely to be much more.

In the union budget for 2012-13, a provision of Rs.61,000 crore was made for fertiliser subsidy.

"Actual burden is likely to overshoot by at least Rs.40,000 crore," said Chander, adding that the fertiliser firms have not been paid the subsidy part by the government for the last eight months.

Fertiliser is supplied to the farmers in India at a heavily subsidised rate.

According to the association, only 40 percent of the cost is recovered from the farmer while the rest comes from the government kitty as subsidy.

P.S. Gahlaut, managing director, India Potash Limited, said the fertiliser industry has been pitching for decontrol. "We have been requesting the government to directly transfer the subsidy to farmers," he said.

Gahlaut said the fertiliser industry has been running on a very thin profit margin due to the government control on the prices.

The net profit of overall fertiliser industry in India in the financial year 2011-12 was about Rs.2,500 crore, just nearly two percent of the total turnover of Rs.117,000 crore, Gahlaut said.