The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on November 6 approved an equity infusion of Rs 10,700 crore for the Food Corporation of India (FCI), to support its working capital needs for the financial year 2024-25.
"Cabinet approves infusion of equity of Rs 10,700 crore for working capital in financial year 2024-25 in Food Corporation of India (FCI). This is a significant step towards enhancing the operational capabilities of FCI in fulfilling its mandate effectively," Union Minister of Information and Broadcasting of India, Ashwini Vaishnaw at a cabinet briefing.
This decision aims to support the agricultural sector by enhancing FCI’s operational and financial strength, reflecting the government's commitment to empowering farmers and reinforcing India’s agrarian economy, Vaishnaw added.
Over recent years, FCI’s equity rose from Rs 4,496 crore in FY 2019-20 to Rs 10,157 crore in FY 2023-24. The additional infusion of Rs 10,700 crore will not only support FCI’s current operations but also reduce its reliance on short-term borrowings, effectively lowering its interest burden and reducing the subsidy requirement from the government, according to a government statement.
FCI resorts to cash credit, short-term loan, ways and means etc. to match the gap in the fund requirement. The increase in the authorised capital will reduce the interest burden, decrease the economic cost and ultimately affecting the government subsidy positively.
With this infusion of capital, the FCI should also embark upon modernizing its storage facilities, improving transportation networks, and adopting advanced technologies.
These measures are essential not only for reducing post-harvest losses but also for ensuring efficient distribution of food grains to consumers.
The Centre provides equity to the FCI for working capital requirement and for creation of capital assets. The FCI is undertaking a comprehensive initiative to create an integrated IT system, leveraging existing internal and external systems.
FCI was constituted under the Food Corporations Act, 1964, to implement the food policy of the government. Its primary objective is to ensure Minimum Support Price (MSP) to farmers, maintain buffer stock and distribution of foodgrains under National Food Security Act and other welfare schemes of the central government.
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