Budget proposes restructuring of Food Corporation of India capital

NEW DELHI: With Budget announcing more capital to be infused in the Food Corporation of India, to enhance the equity, the borrowing of the agency would be reduced. Subsequently the interest cost and subsidy will be reduced, say official.

Currently, FCI has a loan of Rs 1.26 lakh crore from different sources, said an FCI official. “With more infusion of equity, these loans will be repaid, so that interest cost and subsidy arrear will be reduced,” he said.

Our arrear subsidy of FCI as on March 31’ 2017 was Rs 81,303 crore, which has been carry forward for 3-4 years, added the official.


“Capital of the Food Corporation of India will be restructured to enhance equity and to raise long-term debt for meeting its standing working capital requirement,” said the FM in budget speech.

FCI is currently procuring 60 million tonne wheat and rice annually. “The total expenditure annually for procurement and incidental nd distribution cost is Rs 1.30- Rs 1.40 lakh crore. It also includes freight, handling, storage, interest and administrative cost,” said the FCI official.

FCI has taken loan from various agencies including- government’s national small saving fund loan- 70,000 crore , long term bonds from market – Rs 13000 crore , short term loan- 38,000 crore and Rs 5000 crore from consortium of 62 banks. The interest cost that FCI has to pay annually is in the range of Rs 9000 to 10,000 crore.

In current year subsidy gap is of Rs 19000 crore, with government giving 1.01 crore against estimated subsidy requirement of RS 1.20 lakh crore, said the FCI official.