NEW DELHI, JULY 7: For a government battling inflation and rising crude oil prices, there’s another bill that just rose. After the Cabinet approved the new fertiliser policy in June this year, and added complex fertilisers to its growing list of subsidised fertilisers, the gross estimates for subsidy bill have swollen to Rs 1,22,862.08 crore for 2008-09, an addition of Rs 88,694.17 crore to budget estimates for 2008-09.

This has forced the fertilisers department to revise its estimates for payment of subsidy for current financial year. In an internal departmental communication, a copy of which is with The Indian Express, it has justified its increased demand for the first batch of Supplementary Demands for Grants 2008-09. It has admitted that there have been a number of developments in the last two months, some of which have impacted the subsidy requirements adversely. “These are attributable to factors such as steep increase in international prices, addition of complex fertilisers in the concession policy, depreciation of rupee value against dollar, policy on nutrient-based pricing of fertilisers etc,” says the note.

When contacted by The Indian Express, a highly-placed official confirmed the development. “We have informed the expenditure department about the revised estimates for subsidy payments. Accordingly, we have sought the necessary budgetary support in the form of first supplementary demand for grants. Earlier, we had sought a higher amount from finance ministry, to the tune of Rs 56,000 crore, as against Rs 39,000 crore till July 2008.”

In fact, the fertiliser department is going to have an internal meeting this Wednesday on the issue of supplementary demand for grants, where it hopes to arrive on a consensus on the details of the amount sought.

According to fertiliser department, the revised gross estimate of requirement of funds for fertiliser subsidy amounts to Rs 1,22,862.08 crore. This estimate also includes carry-over liabilities of around Rs 5,000 crore from 2007-08. However, this liability from last year of Rs 5,000 crore has already been met. “We expect to meet the enhanced commitment (for payment of subsidies) for this year as well,” a source said.

Initially, in the budget estimates for 2008-09, a gross amount of Rs 34,167.91 crore had been provided. Now, to meet the balance requirement for the year, the department has put in a demand for additional allocation of Rs 88,694.17 crore. Therefore, in a detailed note, it has made a request for provision of Rs 66,453.74 crore for meeting its subsidy payment requirements up to December 2008 under first supplementary demand for grants.

Rs 88,694.17 cr The addition to budget estimate for 2008-09

Rs 1,22,862.08 cr The gross estimate for bloated fertiliser subsidy bill for 2008-09

Rs 66,453.74 cr Subsidy payment requirement up to December 2008 under first supplementary demand for grants

What’s driving up fertiliser prices?

•Steep increase in international prices

•Addition of complex fertilisers in the concession policy

•Depreciation of rupee against dollar

•Policy on nutrient-based pricing of fertilisers