Facing mounting outstanding dues in excess of Rs 60,000 crore, the finance ministry has provided Rs 10,000 crore to the Food Corporation of India...
Facing mounting outstanding dues in excess of Rs 60,000 crore, the finance ministry has provided Rs 10,000 crore to the Food Corporation of India (FCI) for carry out operations of procurement and distribution of foodgrains, reports Sandip Das in New Delhi.
Sources told FE FCI had approached finance minister to provide Rs 20,000 crore as supplementary grant or as part of revised estimate under the food subsidy budget to meet the expenses in the last quarter of the current fiscal. But North Block provided FCI with only Rs 10,000 crore as ways and means advance.
Sources also said any supplementary allocation would be available only by March 2016, forcing FCI to seek short-term loans. Facing an acute cash crunch even as rice procurement activities are peak in January-March, FCI has finalised tenders for Rs 30,000 crore in short-term loans.
The loans were raised from 15 banks including State Bank of India and Punjab National Bank.
In the current fiscal, the government has allocated Rs 97,000 crore as subsidy to FCI against the estimated expenses of Rs 1,18,000 crore. “We have exhausted the allocation under the food subsidy head in the first three quarters of the current fiscal, thus we have been urging finance ministry to provide another Rs 20,000 crore in the current fiscal,” an official said.
The bulk of the food subsidy is allocated to FCI for supplying foodgrain to states under the public distribution system (PDS). Meanwhile, the PDS operation cost has risen sharply in the past few years due to increase in the minimum support prices (MSP) of grains as well as high storage costs.
As reported by FE earlier, unless the finance ministry releases a good part of the unpaid subsidy (estimated to be at an all-time high Rs 73,650 crore by March-end), FCI faces a huge uphill task. Besides, the finance ministry has already rejected FCI’s proposal of allowing Life Insurance Corporation of India to raise Rs 40,000 crore through bonds to support FCI.
Because of the delays in release of subsidies, FCI avails huge amounts as loans every year, even breaching the annual cash credit limit of Rs 54,495 crore with public sector banks, plunging into a virtual debt trap. It borrowed Rs 91,500 crore in FY15 and its interest burden in the year was around Rs 8,200 crore.
Food ministry sources said the outstanding dues to FCI are expected to rise beyond Rs 73,000 crore in the current fiscal due to a mismatch between expenses incurred by FCI and annual allocation under the food subsidy. At the end of the last fiscal, thanks to the customary rolling over of subsidy payments to meet the FRBM goals over the last many years, the unpaid subsidy to FCI had touched Rs 58,650 crore.