Budget may yield Rs 19,000 cr less fertiliser subsidy
The finance ministry is understood to have finalised a budget allocation of only Rs 31,000 crore for fertiliser subsidies and concessions during 2008-09.
By Prabha Jagannathan, TNN |
NEW DELHI: Assurances by finance minister P Chidambaram that the government will not resort to off-Budget accounting notwithstanding, the finance ministry is understood to have finalised a budget allocation of only Rs 31,000 crore for fertiliser subsidies and concessions during 2008-09. The figure is to be finalised by the month end, but could end up once again under-estimated in Budget 2008.
The allocation would be far lower than the rough revised estimates (RE) for 2007-08, pegged at Rs 45,000 crore by the department of fertilisers (DoF). Further, official sources disclosed that the department’s estimates for fertiliser subsidies for 2008-09 are Rs 50,000 crore despite depreciation of the rupee. The BE for 2007-08, in comparison, was at Rs 22,500 crore.
“Even if we get Rs 4,000 crore in the last supplementary, it should still leave an additional requirement of Rs 4,000 crore to even out the carryover from the fiscal — even after accounting for the fertiliser bonds issued and those for which provisions have been made.
In effect, this would mean the net availability for the industry will be only Rs 26,000 crore in subsidies and concessions in 2008-09, leaving a huge shortfall of Rs 20,000 crore,” government sources acknowledged. Of the fertiliser bonds worth Rs 15,700 crore for which provisions have been made, bonds worth Rs 3,890 crore have been issued to the industry.
However, both official and industry sources acknowledge fertiliser bonds are not an ideal solution to the working capital woes of the fertiliser industry, especially since they are being sold at a big discount. Consequently, the DoF has communicated the sentiment that the fertiliser industry would find it convenient to receive the rest of their dues in cash rather than through fertiliser bonds.
Further, sources asserted, “in terms of realistic budgeting, this falls woefully short. Ideally, we would like the finance ministry to make a budgetary provision for two-thirds of the actual requirement so that this comes through before July.
The allocation would be far lower than the rough revised estimates (RE) for 2007-08, pegged at Rs 45,000 crore by the department of fertilisers (DoF). Further, official sources disclosed that the department’s estimates for fertiliser subsidies for 2008-09 are Rs 50,000 crore despite depreciation of the rupee. The BE for 2007-08, in comparison, was at Rs 22,500 crore.
“Even if we get Rs 4,000 crore in the last supplementary, it should still leave an additional requirement of Rs 4,000 crore to even out the carryover from the fiscal — even after accounting for the fertiliser bonds issued and those for which provisions have been made.
In effect, this would mean the net availability for the industry will be only Rs 26,000 crore in subsidies and concessions in 2008-09, leaving a huge shortfall of Rs 20,000 crore,” government sources acknowledged. Of the fertiliser bonds worth Rs 15,700 crore for which provisions have been made, bonds worth Rs 3,890 crore have been issued to the industry.
However, both official and industry sources acknowledge fertiliser bonds are not an ideal solution to the working capital woes of the fertiliser industry, especially since they are being sold at a big discount. Consequently, the DoF has communicated the sentiment that the fertiliser industry would find it convenient to receive the rest of their dues in cash rather than through fertiliser bonds.
Further, sources asserted, “in terms of realistic budgeting, this falls woefully short. Ideally, we would like the finance ministry to make a budgetary provision for two-thirds of the actual requirement so that this comes through before July.
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