As the next budget is likely to be announced by end of April, the government has yet to fulfill the commitments made in the current budget on account of subsidy on urea, besides clearing backlog of 2016-17. The industry is running from pillar to post to get the outstanding payments of previous year to the tune of Rs 12 billion, while there is no movement on the current years' claims. Under the circumstance, there is a likelihood of industry to fall out of the scheme, thus impacting the market and the farmers, said fertilizer industry sources here on Thursday.
In spite of intervention by the Prime Minister Office, the inept mechanism for subsidy disbursement has done little to allay the concerns of the fertilizer manufacturers. The processing of subsidy claims had earlier experienced considerable delays due to the involvement of FBR and the provincial government in the verification of sales.
These delays have resulted in severe cash flow constraints and opportunity costs for the manufacturers. With the exception of Punjab, none of the provinces are willing to support the scheme whole heartedly. Thus the subsidy scheme warranted a serious review to replace it with cost reduction measures, industry circles suggested.
Nevertheless, industry is continuing its resolve to extend full support to the government's initiative to provide fertilizer at affordable prices to improve farmers' economics. The manufacturers are hoping that in 2018 the government will address the genuine concerns of the industry and come forward with more imaginative ways for the benefit of farmers along with the fertilizer industry which are considered to be major contributors to the national economy.
Despite various assurances, the subsidy disbursement remains a distant dream. The fertilizer industry is the largest contributor to the national exchequer and has always cooperated with the government to support the agricultural sector. But, this apathy shown by the government may weaken the resolve of the industry at a time when the international prices have spiked to almost Rs 2000 per bag, thus discouraging the import options.
The fertilizer manufacturers have worked closely with the government to ensure supply of Urea at lower prices by contributing Rs 106 per bag against the subsidy of Rs 100 per bag. The fertilizer industry is the highest contributor to the national exchequer, and it plays a vital role in agricultural growth. The fertilizer companies are waiting patiently for a favorable response from the government. The industry has not disrupted the supply of subsidized fertilizer to the farmers, despite the major cash-flow problems and red-tape in the subsidy disbursement mechanism.
The circles said that an amicable solution of the subsidy payments is eagerly awaited. The Prime Minister Office had taken personal interest in this matter, to ensure that the benefit of this subsidy continues to reach the farmers, and the supply of urea in the market remains uninterrupted. However, the Ministry of Finance and the MNFS&R need to accelerate their efforts to reduce this financial pressure by expediting the payments in the true spirit of the subsidy scheme.
Over the years, this essential industry has been suffering due to some unfavorable policies. Thus, the government should strategically extend more support for the fertilizer sector, enabling it to play its role in national food-security. While the government should expedite the payments, it must consider direct Subsidy Disbursement to the farmers instead of involving the fertilizer manufacturers.
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