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Extra spending on fertilisers comes as a surprise: Saugata Bhattacharya, Axis Bank

Talking to ET Now, Saugata Bhattacharya , Economist, Axis Bank , says till now we had been hearing about the spends on fertilisers being capped because of better delivery of subsidies for urea.

Edited excerpts:

The government is seeking to spend an extra of Rs 33,379 crore in FY18. The banking secretary has gone on record saying that the first tranche of bank recap bonds is going to be part of this list, He had not yet decided whether they will carry an SLR status. Incidentally, we are going to see an additional spend of Rs 20500 crore on fertiliser. What do you make of all of these numbers?

There was a lot of uncertainty regarding the need and the intent of the additional spending. Obviously a growth push stimulus was being considered. We were not really sure what form that would take. We have seen over the last couple of weeks that the bond markets had reacted a bit negatively. They were a bit bearish because of this uncertainty. Now, at least it is more or less clear and I am still struggling to get my head around the concept of the gross and net. Presumably, this is gross, meaning the overall additional spending and net to the centre the rest would be grants of whatever transfers to the state. If that is correct, then the additional spending will be the Rs 66000 crore. So that needs a little clarity. Presumably, if this goes towards speeding up the rural economy a little bit, probably it might be worth it.

I want to clarify that we do not have any information as yet from parliament on when the second supplementary demand for grants has been tabled, how much has been carved out for the bank recap bonds. This figure of Rs 20500 crore for fertiliser is it a bit of a surprise?

It is. I mean I do not really know because till now we had been hearing about the spends on fertilisers being capped because of better delivery of subsidies for urea, the diversion of urea through various neem coating etc. So, it is indeed a bit of a surprise. But this has to be seen in the context of the kharif sowing because the total area from the kharif crop is supposed to be down,

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