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Our Bureau

Cos to stretch their borrowing limits

New Delhi , April 19

The delay in releasing arrear fertiliser subsidy to the tune of approximately Rs 6,000 crore on account of production made during the end part of fiscal 2005-06 has put the fertiliser manufacturers under pressure who are being compelled to stretch their borrowing limits.

This is leading to higher interest costs that would lead to further hike in the subsidy bill during the current fiscal, industry sources said.

Highly placed fertiliser industry sources, requesting anonymity, said: "Arrears to the tune of Rs 5,000-6,000 crore were carried forward from the year 2005-06 due to inadequate provisioning in the revised estimate of 2005-06 for fertiliser subsidy in the Budget presented in February this year and in some cases accumulated arrears of individual companies have crossed Rs 600 crore."

"Fertiliser companies have been making frantic efforts to get payments released, but though three weeks have past in the new financial year, no funds have been released yet and also there is no clear indication as to when the funds would be released," industry officials complained.

The industry feels that it is the procedural delays on part of the Department of Fertilisers that is causing the delay.

Industry officials said: "Due to non-payment for supply of inputs like gas, ammonia, phosphoric acid etc., production can come to standstill and the companies have stretched their borrowing limits to the extremes to pay wages and supply of inputs."

"This extra borrowings is leading to higher incidence of interest which is either to be borne by the companies or by the Government through additional subsidy for money blocked unproductively due to non-payment of subsidy," industry sources said.

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