FCI may raise Rs 32K crore via bond sale over two years

New Delhi: The Food Corporation of India (FCI)is planning to raise Rs 32,000 crore in two years through bond sale in a massive fundraising exercise to fund its grain procurement and storage operations. It will raise Rs 8,000 crore this year and remaining Rs 24,000 crore next year.

“We have got in-principle approval from the finance department. Now we are just waiting for the right time to float the bond in the market. It is likely to happen after the Lok Sabha elections,” said a senior food ministry official,who did not wish to be identified.

In the past six years,it has raised Rs 13,000 crore through bonds in three tranches to fund procurement of food grain at the minimum support price (MSP) and their storage.In 2013, it raised Rs 300 crore for 10 years at the coupon rate of 8.62 per cent followed by a borrowing of Rs 4,700 crore on thesame day for 15 years at coupon rate of 8.8 per cent. In 2014,FCI again hitthe market, raising Rs 8,000 crore for an eight-year term at 9.95 per cent.


The proposed bond is likely to be for a term of 10 years, said another official.

The FCI has budgeted Rs 1.4 lakh crore for operational costs including procurement, storage and transportation.

“The food ministry bears the entire cost as a commitment towards National Food Security Act (NFSA). But FCI must arrange finance on its own also to fund NFSA as in the last few years, the government has not been able pay the entire food subsidy amount,” said the official cited earlier.

The FCI, besides getting funds from the government, has borrowed money from National Small Savings Fund (NSSF) in a big way. “In 2016-17, FCI borrowed Rs 70,000 crore from NSSF, and then again, in 2017-18, it borrowed Rs 1.21 lakh crore from the small saving funds. Since every year the cost of procurement goes up, FCI is short of funds. The money raised will be used to fill the gap,” said the official.