Fertilizer Ministry seeks more than Rs 25,000 crore for urea subsidy bills

New Delhi: The Fertilizer Ministry has sought more than Rs 25,000 crore from the Finance Ministry for making subsidy payments to domestic urea manufacturers, as it is facing liquidity crunch.

In this year's budget, the government had allocated Rs 72,968.56 crore for fertiliser subsidy, out of which Rs 38,200 crore was earmarked for domestic urea.

The Fertiliser Ministry is facing shortage of funds for making payments to domestic urea manufacturers as there were more than Rs 30,000 crore subsidy arrears from the previous years, sources said.

The Department of Fertiliser has sought more than Rs 25,000 crore from the Fertiliser Ministry for making subsidy payments to the domestic urea manufacturers as there has been shortage of funds for making subsidy payments, sources added.

The government has taken slew of measures to improve the efficiency of urea manufacturers so as to reduce the subsidy bill.

The Department of Fertilisers has issued revised energy norms under the new urea policy for existing 25 gas based urea plants in the country, a move that is expected to save about Rs 800 crore in fertiliser subsidy.

Urea is provided to farmers at a fixed subsidised maximum retail price (MRP) of Rs 5,360 per tonne. The difference between the cost of production and MRP of urea is provided as subsidy to manufacturers.

The annual production of urea is stagnant at 22 million tonnes while the demand is 30 million tonnes. The rest is met through imports.