Fertiliser min seeks low-cost loan for cos under subsidy strain
The stressed companies are finding it difficult to sustain operations. Subsidies offset a large chunk of the total cost of production/import of fertilisers: 50% in the case of gas-based domestic urea, 80% for imported urea, 39% for DAP or diammonium phosphate and 47% for MOP or muriate of potash.
However, due to inadequate budgetary allocations, the funds generally get exhausted by the middle of the year. “There is an urgent need for the government to provide extra subsidy. The banking arrangement would certainly help companies to reduce their cost of borrowings and increase the efficiency,” Chander said. A similar arrangement was made in 2008-09, when fertiliser firms raised Rs 22,000 crore in bank credit – from State Bank of India and State Bank of Patiala – in lieu of subsidy payments.
Sources said the fresh proposal would see companies raising loans from state-owned banks this year, too. As per the 2012-13 Budget subsidy allocation, the government had provided Rs 13,398 crore for imported urea, Rs 19,000 crore for indigenous (urea) fertilisers, and Rs 28,576 crore for the sale of decontrolled fertilisers (DAP, MOP and complexes) at a subsidised rate to farmers. The subsidy shortage is especially acute for phosphatic and potassic fertilisers.
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