Plan to recast fert subsidy, Rs 1,000cr cut likely

Font Size

Print

Feedback

Email

Discuss

New Delhi, February 22:: The government is proposing to reduce fertiliser subsidy by Rs 1000 crore while fixing new policy parameters for the industry under the VIIth and VIIIth pricing period.

Under the proposed mechanism, the government will withdraw five per cent vintage allowance to plants older than 10 years, hike in capacity utilisation norms from the present 85 per cent to 100 per cent by 2004, and reassess the plant capacity. The announcement will be made within a fortnight According to informed sources, a Cabinet note has been circulated among the group of ministers, constituted under the chairmanship of the finance minister, and an announcement may even be made in the forthcoming budget.

The issue of ‘hidden susbsidy’ was also discussed at the preliminary meeting of the fertiliser sub-committee of the Parliament’s standing committee on fertiliser, chemicals and petroleum on February 13. It is learnt that the members questioned the government’s contention that the whopping Rs 7,956 crore fertiliser subsidy bill during 2001-02 was primarily used to subsidise the farming community.

The move to reduce and restructure fertiliser subsidy forms part of government’s initiative to ensure that fertiliser subsidy reaches farmers and not creamed away by the industry.

In the last budget, Mr Yashwant Sinha had announced a fertiliser subsidy bill cutback of Rs 1524 crore from the estimated Rs 9,470 crore for 2000-01 fiscal. A substantial amount of this is still accruing to the industry as hidden susbsidies and not to farmers, said sources.

When reached for his comments, Union fertiliser minister SS Dhindsa said, “The government is contemplating reassessment of its yardstcik for guaging production capacity of fertiliser producers to ensure that the advantage of subsidy scheme accrue more to farmers since majority of the farmers in the country have small and marginal land holdings.”