The government on Wednesday increased the authorised capital of Food Corporation of India (FCI) to Rs 10,000 crore from Rs 3,500 crore, paving the way for additional equity infusion in the state-owned firm.
The decision would also help the FCI, the government's nodal agency for procurement and distribution of foodgrains, in reducing its debt and interest cost.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved increasing the authorised capital of the FCI.
"With the increase of authorised capital, additional equity capital can be infused in the FCI through Union Budget, to fund the foodgrains stock, perpetually held by the FCI," an official statement said.
This will reduce the borrowings of the FCI, save its interest cost and reduce food subsidy, it added.
"The operations of the FCI require maintaining perpetual stock of foodgrains which needs to be funded by the Government of India through equity or long-term loan," the statement said.
The Centre is providing equity to the FCI for maintaining stocks. The present authorised equity capital of the Corporation is Rs 3,500 crore and paid up equity capital as on March 31, 2019 is Rs 3,447.58 crore.
The 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 of foodgrains besides distribution of foodgrains under National Food Security Act and other welfare schemes of the central government.
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