The fertiliser industry expects unpaid subsidy dues owed to it by the Centre to cross Rs 45,000 crore by March 2016.
“The current fiscal started with a backlog of Rs 40,000 crore as arrears from previous years. The Budget had allocated Rs 71,969 crore towards fertiliser subsidy. The balance amount after discharge of the earlier arrears got exhausted by August for subsidy on urea and by October for that on decontrolled phosphatic and potassic fertilisers,” said Rakesh Kapur, joint MD of the Indian Farmers’ Fertiliser Cooperative and chairman of the Fertiliser Association of India.
The estimated unpaid fertiliser subsidy carried forward to the next year have risen from Rs 7,216 crore in FY11 to Rs 22,200 crore in FY12, Rs 31,579 crore in FY13, Rs 40,341 crore in FY14 and Rs 40,000 crore in FY15.
“If no additional funds are provided … in the current or next session of Parliament, the dues could cross Rs 45,000 crore by the end of FY16,” Kapur said.
He added that not receiving timely payments from the government was forcing firms to borrow to cover the gap between their revenues and expenditures. Borrowings, in turn, entailed additional interest burden — in this case, Rs 3,500-4,000 crore on average outstandings of Rs 35,000 crore. “For most industries, the financial year runs from April to March. For us, it is from April to September as we simply run out of money after that”, said RM Deshpande, executive director of Nagarjuna Fertilisers and Chemicals Ltd.
Such large unpaid subsidy amounts, according to the industry, would ultimately affect the supply of fertiliser to farmers.
“The industry is already operating on thin margins, thanks to the controls over pricing of fertilisers and restrictions on various expenditures that can be claimed under the subsidy regime. Not being paid even what is recognised as dues makes things worse,” said Satish Chander, director-general of FAI.
He claimed that in many cases, payments to the industry were not made even after Cabinet nod. For example, the decision to allow a Rs 350 per tonne increase in fixed costs (towards wages and salaries, repair and maintenance, and selling expenses) to a minimum of Rs 2,300 per tonne for urea plants was notified on April 2, 2014. But the payments against this – Rs 900 crore annually – are still to be made even after 18 months.