Fertiliser industry urges government to release subsidy soon

August 13th, 2008 - 5:11 pm ICT by IANS  

Chandigarh, Aug 13 (IANS) The Indian fertiliser industry has urged the government to immediately release some funds under the subsidy account to ensure its survival, a top industry official has said. “For the year 2008-09, the fertiliser industry is facing a huge deficit of Rs.890 billion as the government has allocated only Rs.310 billion as fertiliser subsidy to the industry against a total subsidy requirement of Rs.1.2 trillion,” Satish Chander, director general of the Fertiliser Association of India (FAI) told the media here Tuesday.

“This is barely sufficient to take care of fertilisers supplied only up to June 2008,” Chander said.

He felt the main problem was that the government is giving subsidy to the farmers in an irrational way. The entire process is so time consuming that the industry gets starved of funds in the process and this in turn creates serious cash flow problems, he said.

The fertiliser industry is under the Essential Commodities Act, which means that the functioning of the sector is completely regulated by the government. The regulation is so complete that right from cost of raw materials to delivered cost of finished products, everything depends on the government, Chander said.

“The industry recovers only 20 percent of the cost from the farmers and for the balance 80 percent it is totally dependent upon the government,” he said.

“This 80 percent is also not paid entirely in cash and a certain portion of it is paid in the form of bonds which the industry is forced to sell at discounted rates,” Chander said.

“No investment has come into the fertiliser sector during the last one decade, resulting in our increasing dependence on imports which in turn eats away the larger portion of the available funds,” he said.

“All of these are bound to affect the food security of the country. So we request our government to take a fresh look at the issues facing the industry at the earliest,” he said.

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