Faced with liquidity crunch, fertiliser industry body FAI has written to Finance Minister Arun Jaitley seeking arrangement of funds to clear outstanding subsidy arrears, which are likely to cross Rs 40,000 crore by March-end.
In a letter to the Finance Minister, Fertilizer Association of India Director General Satish Chander has said that domestic urea manufacturers have not been paid since August, 2014. Therefore, a number of plants have resorted to shut down.
Chander also pointed that while domestic fertiliser manufacturers suffer “due to non-payment of dues for months together, upfront payments are made to foreign suppliers”.
“The accumulated unpaid subsidy dues for entire fertiliser industry are likely to exceed Rs 40,000 crore by March, 2015...Domestic urea manufacturers’ payment arrears will exceed Rs 30,000 crore this year,” the letter said.
The industry body has also appealed the Minister to “intervene” and help with some arrangements including Special Banking Arrangement (SBA) of funds to tide over grave liquidity crisis of fertiliser companies.
Chander added that this problem had been aggravating for the last few years. The carryover of unpaid dues was to the extent of Rs 35,000 crore from 2013-14 to 2014-15.
The government had allocated Rs 72,970.30 crore in the Union Budget 2014-15 for fertiliser subsidy.
Of this, Rs 12,300 crore was meant for imported urea, Rs 36,000 crore for domestic urea and the rest Rs 24,670.30 crore for sale of partially de-controlled fertilisers (like phosphatic & potassic fertilisers).
Meanwhile, the Fertiliser Ministry has already sought about Rs 12,500 crore from the Finance Ministry for making subsidy payments to domestic manufacturers.
Urea is provided to farmers at a fixed subsidised maximum retail price (MRP) of Rs 5,360 per tonne. The difference between the cost of production and MRP of urea is provided as subsidy to manufacturers.