meeting its cash flow requirement.
To meet the gap between government's allocation towards food subsidy and the actual cost incurred by FCI, the government took a series of measures to improve cash flow for the corporation, which distributes subsidised grains to more than 40 crore people under the targeted public distribution system (TPDS). Besides, FCI also depends on the cash credit limit of Rs 54,495 crore from 62 public sector and scheduled banks for its operations. The cash credit limit is fixed annually by the finance ministry in consultation with the food ministry.
Recently, the finance ministry turned down an FCI proposal to raise Rs 8,000 crore through bonds that would have reduced its borrowing cost and increased cash flows. Food ministry sources told FE that the finance ministry has stated that the limits for giving government guarantee for such bonds for the current fiscal have already been exhausted.
FCI had earlier raised Rs 5000 crore in March 2013 through taxable bonds. Officials say that the annual interest saving through issue of these bonds would be Rs 200 crore.