Fertiliser min seeks low-cost loan for cos under subsidy strain
Sources in the ministry indicated that the interim arrangement will help cash-strapped fertiliser firms to stay afloat by borrowing funds from public sector banks at lower rates. Under the plan, the fertiliser firms are going to raise loans guaranteed by the government against the subsidy receivables. The finance ministry is expected to share about 8-9% of the interest burden on loans and the remaining will be borne by fertiliser firms, a ministry official said, requesting anonymity.
This arrangement would also help the finance ministry keep the fiscal deficit under check in 2012-13, as the loan repayment is likely to spill over to the next fiscal. The government is already hard-pressed to stick to its upwardly revised fiscal deficit target of 5.3% by the end of March 2013, as higher-than-expected expenses and lower-than-expected revenues derail its fiscal maths.
IFFCO managing director US Awasthi said: “It is very difficult for the finance ministry to provide subsidies to the companies for the next six months. The interim proposal will certainly help the companies since the borrowing cost will get reduced by the part interest shared by the ministry.” Most fertiliser companies are affected
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