Fertilizer Ministry Provided with Third of Total Subsidy Demand

The Indian finance ministry declared in January 2011 that it will provide just a third of the Rs 30000 crore sought by the fertilizer ministry to meet higher subsidy payouts. The ministry’s declaration reflects its intention to contain fiscal deficit within the budgeted limit.

The fertiliser ministry had demanded Rs 82245 crore as against the budgeted Rs 52837 crore in 2010-11 citing a spike in international prices and higher input costs and had pointed out that if balance amount is not released fertiliser companies would have to bear a part of the cost incurred in selling their products at prices fixed by the government. The food ministry also demanded a higher subsidy payout. The finance ministry had provided an additional Rs 5000 crore towards fertiliser subsidy in the second supplementary grants in December 2010. The demand for additional subsidy amount increased in the wake of a sharp rise in international fertiliser prices which are ruling at two-year high levels. The retail prices were raised only marginally in 2010.

The government highlighted its commitment of additional expenditure of more than Rs 75000 crore in the current fiscal through two supplementary demands for grants despite a Rs 10000 crore cut in its borrowing plan. The finance ministry will be able to meet higher demands only if revenues are higher or actual spending is less. It is exploring both the options.