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Informist, Wednesday, Aug 14, 2024

MUMBAI – The finance ministry has released 640 bln rupees to the Food Corp of India, which will help the corporation avoid having to resort to short-term loans or cash-credit borrowing from banks to finance its operations, the Financial Express newspaper reported today. The amount released upfront is 44% of the total food subsidy budget allocated to the FCI for the current financial year. In 2024-25 (Apr-Mar), the overall food subsidy budget of the government is 2.05 trln rupees, of which 1.47 trln rupees will be spent through the FCI, the report said.

The finance ministry has been paying the FCI in a timely manner in the last couple of years, which has ensured that the corporation does not have to rely on borrowings to fund its expenses, which are mainly in the nature of payments to farmers for the grains it purchases, the report said.

The 2024-25 Budget outlay for the FCI would be enough to meet its expenditure and the finance ministry releasing food subsidy expenses would benefit the corporation, the report quoted an unnamed official as saying. "Despite the FCI currently holding grain stocks more than three times the buffer, financial provisioning for the current year would be sufficient," the report quoted the unnamed official as saying. 

The FCI has a total debt of 630 bln rupees, including 367 bln rupees of bonds that will mature between 2028 and 2030, the report said. The finance ministry provides a provision for the FCI to avail loans up to 750 bln rupees at any given point of time, with a tenure of 90 days, to bridge the cash-flow mismatch. The designated banks charge an annual interest rate of 6.98-7.36% for these loans, the report said.

The FCI, along with state agencies, procures and distributes more than 55 mln tn of wheat and rice through 530,000 fair price shops every year, the report said.  According to latest available data, the FCI currently holds 32.7 mln tn of rice, 19 mln tn of paddy, and 26.8 mln tn of wheat in its stock. The government will soon start reducing its grain stock through open market sales and the export of white rice is expected to start from Oct 1 after the arrival of paddy for the new season, the report said.  End

Compiled by Shreya Shetty

Filed by Vidhi Verma

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