According to a notification from the Ministry of Food issued on Friday, the central government has raised the authorized capital of the Food Corporation of India (FCI) from INR 10,000 crore to INR 21,000 crore. This move aims to provide additional equity capital to support the foodgrains stock held by the government-owned firm.
“This will help the FCI in reducing its borrowings from banks and other institutions, leading to a saving of INR 750 crore annually,” said a senior official of FCI without wanting to be named.
The Food Corporation of India (FCI), the primary grain-handling agency of the central government, serves approximately 800 million people by utilizing food subsidies. Most of its expenses are attributed to the procurement of wheat and rice from farmers at the minimum support price (MSP), as well as their storage, transportation, and related activities.
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The estimated annual expenditure from the exchequer for supplying free grains under NFSA in 2023-24 was INR 1.97 trillion, allocated by the center to the FCI as food subsidy. From January 1, 2023, to December 15, 2023, the government disbursed INR 1,67,875 crore to the FCI as part of this food subsidy.
In recent years, the corporation has experienced a sense of financial ease, largely due to the government’s timely disbursement of food subsidy amounts. This shift occurred after the cessation of the practice of relying on National Small Saving Fund (NSSF) loans for subsidy financing, a decision made in the FY22 Budget to enhance fiscal transparency.
In 2019, the government raised the authorized capital of FCI from INR 3,500 crore to INR 10,000 crore.
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Established under the Food Corporations Act of 1964, the FCI is tasked with executing the food policy of the Indian government. Its main goals include guaranteeing minimum support prices to farmers, managing buffer stocks of foodgrains, and distributing foodgrains under the National Food Security Act along with other central welfare schemes.
