In a bid to streamline the fertiliser supply line up to block level, the chemicals and fertilisers ministry has cleared a proposal for an increase in freight subsidy.
Under the proposal, strategic stock points will be created up to block levels, facilitating quicker delivery of fertilisers to farmers and improve stock position in shortage-hit areas. The proposal will be placed before the Cabinet next month.
The initiative may, however, increase the subsidy burden of the government substantially as the finance ministry has not made any budgetary provision for freight subsidy for the current fiscal. The government had provided Rs 22,451 crore for fertiliser subsidy in the current fiscal. But with an increase in feedstock prices and consumption level, the subsidy bill is expected to go up to Rs 53,000 crore for the period.
This includes an outstanding of Rs 10, 000 crore for the last year.
?The step has been taken on the instructions of chemicals and fertiliser minister Ram Vilas Paswan and will facilitate the availability of the fertiliser at the nearest point of consumption,? the sources said.
With the introduction of PSP system, the fertiliser companies will be become eligible for receiving the freight charges up to block level. The proposal has been cleared by the fertiliser ministry.
?The companies have been getting freight subsidy at the rate of Rs 461 per ton whereas the actual freight subsidy is more that Rs 610 per tonne from factory gate to block level. To avoid the deficit the companies used to off-load the fertiliser at the nearest market head. The proposal has been cleared by the government? a senior official in the department of fertilisers said.