The Hindu Business Line : Govt likely to save Rs 3,000 cr on fertiliser subsidy bill

New Delhi Dec. 25 The appreciation of the rupee against the dollar and anticipated lower imports are likely to reduce the Government’s fertiliser subsidy bill by around Rs 3,000 crore for the current financial year.

“According to fresh estimates calculated by the Finance Ministry and Department of Fertilisers, the fertiliser subsidy bill for the current financial year is likely to be Rs 45,000 crore, against the earlier estimates of around Rs 48,000 crore, which includes arrears of Rs 8,000 crore that was carried forward from the previous fiscal,” official sources told Business Line.

They added that one reason for the fall in subsidy outgo estimates was the rupee appreciation that has absorbed part of the rise in international fertiliser prices. The rupee has gained 12.5 per cent against the dollar during the year. “Though the international prices have gone up considerably during the calendar year, the total contracted quantities might not be fully imported and this is why despite the rise in costs we are anticipating some fall in the subsidy outgo this year,” the sources said.

According to estimates till the end of March 2008, around 6.7 million tonnes of urea would be imported, while the imports of diammonium phosphate (DAP) and muriate of potash (MOP) are likely to be around three million tonnes each.

The officials added that generally as against the estimates, the total imports would be lesser by around two to three per cent by the end of the financial year.

The officials also said that the Government’s subsidy bill may go up by at least 30 per cent for the next financial year on account of rising global prices of DAP and MOP, which have a share of 50 per cent on the total subsidy bill.