Government move to bring down FCI borrowings, reduce food subsidy outgo – Times of India
NEW DELHI: In a move that will help Food Corporation of India (FCI) to reduce its borrowings from banks and save around Rs 750 crore annually, govt on Friday increased authorised capital of the corporation from Rs 10,000 crore to Rs 21,000 crore. This move will also reduce the overall food subsidy.
FCI is responsible for procurement of foodgrains from farmers, stocking and distribution under the PDS. Nearly 70% of the food subsidy budget is routed through the FCI. In order to keep sufficient foodgrain stocks and also to fund delays in subsidy payment from govt, the FCI borrows through short term loans and cash credit limits.
As per a food ministry notification on Friday, the move would infuse additional equity capital to fund the foodgrains stocks held by FCI, which is entirely owned by govt. Earlier in 2019, govt had increased the authorised capital of FCI from Rs 3,500 crore to Rs 10,000 crore.
“This is a significant milestone in our journey towards serving the farmers and consumers. Govt has shown confidence in the capabilities and dedication of FCI by more than doubling our authorised capital,” said an official.
As per the revised estimates for 2023-24, out of the total allocation of Rs 2.1 lakh crore under the food subsidy, Rs 1.4 lakh crore is routed through FCI. The agency maintains foodgrain stocks, a major part of which are carried perpetually as a part of its operations and maintaining buffer stock responsibilities.
The financial health of FCI has been relatively comfortable in recent years as the govt has been promptly releasing food subsidy amounts.
FCI is responsible for procurement of foodgrains from farmers, stocking and distribution under the PDS. Nearly 70% of the food subsidy budget is routed through the FCI. In order to keep sufficient foodgrain stocks and also to fund delays in subsidy payment from govt, the FCI borrows through short term loans and cash credit limits.
As per a food ministry notification on Friday, the move would infuse additional equity capital to fund the foodgrains stocks held by FCI, which is entirely owned by govt. Earlier in 2019, govt had increased the authorised capital of FCI from Rs 3,500 crore to Rs 10,000 crore.
“This is a significant milestone in our journey towards serving the farmers and consumers. Govt has shown confidence in the capabilities and dedication of FCI by more than doubling our authorised capital,” said an official.
As per the revised estimates for 2023-24, out of the total allocation of Rs 2.1 lakh crore under the food subsidy, Rs 1.4 lakh crore is routed through FCI. The agency maintains foodgrain stocks, a major part of which are carried perpetually as a part of its operations and maintaining buffer stock responsibilities.
The financial health of FCI has been relatively comfortable in recent years as the govt has been promptly releasing food subsidy amounts.
