Low Fertilizer Subsidy for 2008-09 Budget

By: EconomyWatch   Date: 30 June 2010

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Abstract:
In this paper we will discuss about the low fertilizer subsidy which is going to be allocated in the budget 2008 - 09. The Department of Fertilizers have clearly stated their objections against this. They may request the Finance Minister to provide at least two third of the actual requirement.

It is learnt that the Finance Minister will go for a low fertilizer subsidy in the 2008 - 09 budget. The F.M, Mr P. Chidambaram, has reportedly allocated only 31,000 crore rupees for fertilizer subsidies. However, the figure has not been finalized yet. But it is clear that fertilizer subsidy is again going to be underestimated in the coming budget.

The budget allocation for fertilizer subsidy has decreased than that of the estimated figure, which was Rs 45,000, in 2007. The officials of the Department of Fertilizers (DOF) further said that the department has estimated Rs 50,000 crore for fertilizer subsidies for this year despite the depreciation of rupee.

The government sources said that only Rs 26,000 crores will be available as concessions and subsidies during 2008 - 09 which results in a huge shortfall, almost Rs 20,000 crores. Bonds worth only Rs 3,890 crore have been issued for the fertilizer industry out of the total value of Rs 15,700.

However, the officials of DOF have opined that bonds are not the ultimate way to inject working capital into the fertilizer industry. One of the main reasons behind it is that they are used to sell at a huge discount. They also have made their stand clear about the budget allocation by saying that they will ask the Finance Minister to revise the subsidy amount and provide at least two third of the total requirement.


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