NEW DELHI: The Finance Ministry is struggling with its math to cap subsidy payments for fertilisers in this year’s budget. The bill is overshooting by at least Rs 25,000 crore.
“The overall subsidy bill is overshooting the target. There are some payments that have been rolled over from last year to this fiscal year. Also, the payment for Food Corporation of India is pending. In any circumstances, the government will require at least Rs 25,000 crore more allocation towards subsidy payments. While the government will stretch allocation, it is considering a cap on fertiliser subsidy,” said a senior finance ministry official.
Last year, government had exceeded its fertiliser subsidy bill by Rs 12,000 crore. It had then approved a special banking arrangement for Rs 10,000 crore fertiliser subsidies in FY19 and the subsidy deficit to be rolled over to next fiscal.
The government had budgeted Rs 70,000 crore for fertiliser subsidies for FY19. However, sources have claimed that it was not sufficient. “The budget was not sufficient. In fact, about half of the money was spent to settle dues from the previous year. Also, fall in rupee made imported fertilisers more expensive. And this, combined with the agrarian crisis, resulted in an increase in subsidy requirements,” the official added.
The finance ministry is trying to put a cap on fertiliser subsidies, in order to stop the subsidiary bill from going out of hand and to maintain fiscal prudence. It is instead exploring other routes, like last year’s special banking arrangement.