Govt owes FCI R3,166 cr for grain supplies

Written by Sandip Das | New Delhi | Updated: Jun 20 2013, 05:46am hrs
More than a year after a Parliamentary panel asked the rural development and human resource development ministries to pay long-outstanding dues amounting to more than R3,100 crore to Food Corporation of India (FCI) for subsidised grain supplied under various social welfare schemes, there has not been any progress on the settlement front.

Sources told FE that out of the R3,166 crore outstanding against the two ministries, more than R2,890 crore is with the rural development ministry since 2006 and the rest is with the HRD ministry. FCI had allocated foodgrains to the rural development ministry for distribution to poor families under Sampoorna Grameen Rozgar Yojana (SGRY) in 2004.

FCI supplied grain under SGRY, which has been since closed and merged with the National Rural Employment Guarantee Act (NREGA). The corporation also supplies foodgrains under the Mid-Day Meal (MDM) scheme implemented by the HRD ministry.

We allocated foodgrains then without a corresponding budgetary provision, which is yet to be paid despite several reminders and discussion, a senior food ministry official said.

While FCI is paid in advance for supply of grain for distribution through the public distribution system (PDS) and to the armed forces, contributions to the two ministries' flagship schemes were made on credit.

Meanwhile, the HRD ministry has made a provision for a revolving fund worth R300 crore for the foodgrains to be supplied under MDM, which is helping FCI recover the cost of the grain.

Food ministry official said that due to the non-settlement of dues, FCI is forced to borrow from banks under the existing cash credit norm, for which it pays interest.

"The committee fails to understand the reasons behind the outstanding dues when the states and union territories are required to deposit the full amount of foodgrain in advance before lifting the grain from FCI depots," the parliamentary standing committee on food, consumer affairs and public distribution (2011-12) had said in its report presented to the Lok Sabha last year.

Due to the government's non-seriousness in liquidating the dues to FCI, the panel has recommended to the food ministry "to take up the matter at the highest level of the two ministries for early payment of the outstanding dues".

FCIs authorised and paid-up capital is around R2,500 crore and its borrowings cannot exceed 10 times its capital and reserve funds. FCI official said that the banks charge penal interest on the R54,000 crore of credit availed.

Meanwhile with the rising food subsidy bill, the government has allowed FCI to raise unsecured short-term loans up to R20,000 crore for meeting the cash flow requirements of the corporation.