The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, today approved ex post facto the implementation of the Special Banking Arrangement (SBA) for Rs.14,500 crore for outstanding claims on account of fertilizer subsidy in the year 2013-14.
Government is making fertilizers namely Urea and 22 grades of Phosphatic and Potassic (P&K) fertilizer available to farmers at subsidized prices through fertilizer manufacturers / importers. Subsidy to fertilizer companies is paid from funds allocated under regular budget estimates for each year. In order to meet carried over subsidy liabilities and help fertilizer companies overcome their liquidity problems, due to delay in payment of subsidy, an SBA had been made during 2013-14 with a consortium of nationalized banks to avail loans with the approval of the Ministry of Finance. The loan together with Government interest amounting to Rs.169.33 crore has been repaid from Budget Estimates for 2014-15, within the sanctioned budget under the Vote on Account.