In view of mounting food subsidy arrears, state-run Food Corporation of India (FCI) has raised Rs 30,000 crore as a short-term loan from consortium of banks including SBI and PNB to meet working capital requirements.
The FCI, nodal agency for procurement and distribution of foodgrains, is facing a liquidity crunch as its subsidy arrears are estimated to cross Rs 58,000 crore by March 2016, against Rs 50,000 crore at the start of this fiscal.
In 2014-15, the government had allocated Rs 92,000 crore as food subsidy, out of which Rs 91,995.35 crore was given to the FCI. The actual subsidy outgo during the year was Rs 1,02,476 crore.
In the current fiscal, the government has allocated Rs 97,000 crore as subsidy to the FCI against the estimated bill of Rs 1,18,000 crore.
“FCI has finalised the tenders for Rs 30,000 crore as a short-term loan from 15 banks including State Bank of India and Punjab National Bank. The amount will be withdrawn in phases during the fourth quarter of the current fiscal,” a source said.
So far, the whole subsidy amount of Rs 97,000 crore has been released and it has been utilised, the short-term loan is being raised for the working capital requirements, the source added.
The loan has been raised at average interest rate of 9.6 per cent and is for the period of 150 days, the source added.
Maximum amount of Rs 10,000 crore has been raised from PNB, followed by Rs 7,000 crore from SBI and remaining from others including public and private sector banks.
FCI has a cash credit limit of Rs 54,495 crore with a consortium of 67 banks at a rate of 10.51 per cent. In addition, it can raise a short-term loan of up to Rs 30,000 crore by inviting tenders from the banks.
The bulk of the food subsidy is paid to the FCI for running the public distribution system (PDS).
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, the source added.
Meanwhile, the FCI had also moved a proposal to raise Rs 40,000 crore through long-term bonds from LIC to liquidate subsidy arrears due from the government.
The proposal is at present under review of the government, the source said.