Budget 2013: Fertiliser subsidy cut: a big blow to ferlitiser makers

NEW DELHI: In a major blow to the fertiliser sector, the finance minister P Chidambaram has lowered subsidy from Rs 65,974 crore to Rs 65,971 crore in the next fiscal. This will hamper the payment of subsidy to fertiliser companies due in this fiscal.

"The industry is overdue with subsidy payment of around Rs 25,000 crore. Rather than making additional provision in the budget, government has curtailed the subsidy. If we get our subsidy due for fiscal 2012-13, what will happen to our payments in the next fiscal?" questioned Satish Chander, director general, Fertiliser Association of India (FAI), an industry body.

Under the pressure to keep fiscal deficit under 5.3%, the government has cut down on the fertiliser subsidy making operations difficult for companies which have not been paid subsidy since July last year.

"There was little government could do to contain fiscal deficit. Now, it should increase urea prices periodically to cut down the subsidy burden. We need payment of subsidies regularly to run the show," said U S Awsathi, managing director, Iffco, the largest fertiliser company in the country.