New Delhi: The finance ministry has granted Rs10,000 crore, under a special banking arrangement (SBA), as sought by the Department of Fertiliser to help the industry tide over the liquidity crunch.
The finance ministry approved Rs 10,000 crore as SBA and it will help to increase the cash flow in the sector, Chemicals and Fertiliser Minister Ananth Kumar said here.
The SBA, under which fertiliser companies can take loans from banks against subsidy receivables, would help the industry meet its fund requirements till the time the cash subsidy is released by the finance ministry.
Outstanding subsidy amount in the sector now stands at Rs 20,000 crore, against Rs 40,000 crore in 2009.
“We will pursue for the release of subsidy with the finance ministry, and see the dream-day without backlog,” the minister said.
Fertiliser subsidy arrears are estimated to be around Rs 35,000 crore by the end of this fiscal. In view of delayed payments of subsidy by the government, the industry has to bear about Rs 4,000 crore annually as interest cost. In November last year, the minister had promised the industry to clear fertiliser subsidy arrears at the earliest.
With the several initiatives taken by the government, including the revival of five closed urea units, will help India became self-sustained in urea in a couple of years, the country can export the fertliser.