New Delhi: With a step that will help Food Corporation of India (FCI) on Friday increased its borrowings from banks to reduce its borrowings and save about Rs 750 crore annually. Authorized capital Corporation’s net worth increased from Rs 10,000 crore to Rs 21,000 crore. This move will also reduce the total food subsidy.
FCI is responsible for procurement, storage and distribution of food grains from farmers under PDS. About 70% of the food subsidy budget is routed through FCI. To maintain adequate food grain stocks and delay subsidy payments from the government, FCI borrows through short-term loans and cash credit limits.
According to a Food Ministry notification on Friday, the move will provide additional equity capital to finance the foodgrain stocks held by FCI, which is wholly owned by the government. Earlier in 2019, the government had increased the authorized capital of FCI from Rs 3,500 crore to Rs 10,000 crore.
“This is an important milestone in our journey towards serving farmers and consumers. The government has shown confidence in the capabilities and dedication of FCI by more than doubling our authorized capital, an official said.
As per the revised estimates for 2023-24, out of the total allocation of Rs 2.1 lakh crore under food subsidy, Rs 1.4 lakh crore is routed through FCI. The agency maintains food grain stocks, a large portion of which is continuously maintained as part of its operations and maintaining buffer stock responsibilities.
The financial position of FCI has been relatively comfortable in recent years as the government has been releasing food subsidy amounts promptly.