With the finance ministry’s outstanding dues to the Food Corporation of India (FCI) piling up, the corporation’s debt burden is rising relentlessly. Sources told FE that FCI paid Rs 8,193 crore as interest to banks in FY15, a year in which it raised loans of Rs 91,504 crore. The interest outgo was Rs 7,191 crore in the previous year and had stood much lower at Rs 2,448 crore in FY10. The Centre’s outstanding dues to the FCI had risen 660% to Rs 56,114 crore in FY15 from Rs 7,377 crore in FY10.
“The finance ministry’s inability to provide us with sufficient budgetary support under the food subsidy head has forced us to borrow from the banks from time to time,” an FCI official said.
Usually, FCI depends on an annual cash credit limit of Rs 54,495 crore from 67 public sector and scheduled banks to carry out operations like procurement of mostly rice and wheat from the farmers and distributing these grains to states for the Public Distribution System. However, these loans are availed against the value of foodgrains stock held with the corporation. Additionally, the corporation also seeks short-term loans from banks.
For loans availed against cash credit limits, the FCI pays annual interest of 11% while for short-term loans, it pays an interest of 9.9%
FCI’s costs of procurement, storage and transportation have been rising steadily over the years, driven by the annual rise in the minimum support price and the excess grain stocks held by the corporation. At the start of August 2015, FCI had grain stocks of 52 million tonne (MT). The current volume of grain stocks is still higher than the buffer stocks norm of 30.7 MT required at the start of October. In June 2012, the stocks stood at a record 82 MT.
Meanwhile, food minister Ram Vilas Pawan had recently stated in Parliament that his ministry was facing a shortage of funds for the disbursement of food subsidy to FCI, as well as states such as Madhya Pradesh, Chhattisgarh and Odisha that have adopted the Decentralised Procurement Programme (DCP).
According to Paswan, the outstanding dues to FCI are expected to rise beyond Rs 72,000 crore in the current fiscal due to a mismatch between expenses incurred by FCI and annual allocation under the food subsidy. Even the outstanding dues on account of food subsidy to the states under the DCP are expected to be around Rs 6,405 crore by the end of the current fiscal.
“Owing to less allocation of funds in the Budget compared to the projected requirement, this department is facing shortage of funds in disbursing food subsidy to FCI as well as to states,” Paswan said.
As reported by FE earlier, Paswan said the government had taken several measures to make available sufficient funds to FCI and at present was considering a proposal to raise Rs 40,000 crore through the issue of bonds from Life Insurance Corporation of India.
