Government Approves ₹10,700 Crore for Food Corporation

November 7, 2024

The Cabinet Committee on Economic Affairs (CCEA) approved a substantial equity infusion of ₹10,700 crore into the Food Corporation of India (FCI). This decision aims to enhance the operational capabilities of FCI, ensuring it can effectively support the agricultural sector and the welfare of farmers across India.

Purpose of the Equity Infusion

The infusion will convert ‘Ways and Means Advance’ into equity for the financial year 2024-25. This conversion serves as working capital for FCI. The government emphasizes that this move reflects its commitment to strengthening the agrarian economy and supporting farmers.

Background of FCI

FCI was established in 1964. It started with an authorized capital of ₹100 crore and an initial equity of ₹4 crore. Over the years, FCI’s capital has grown. As of February 2024, its authorized capital reached ₹21,000 crore. The equity increased from ₹4,496 crore in 2019-20 to ₹10,157 crore in 2023-24. The recent approval marks a pivotal moment in FCI’s financial evolution.

Farmers, especially from Punjab and Haryana, have been vocal about the need for increased capacity within FCI. Reports indicated delays in paddy procurement after the kharif harvest. This infusion is expected to address these concerns by enhancing FCI’s operational efficiency.

Operational Enhancements

The equity infusion is a strategic step to improve FCI’s operational capabilities. It will reduce the reliance on short-term borrowings, which FCI often resorts to meet its funding requirements. Lowering the interest burden will ultimately decrease the financial subsidy needed from the Government of India.

Government’s Commitment

The Centre’s decision underscores its dedication to the agricultural sector. The government aims to improve FCI’s financial strength and operational capacity, which are crucial for meeting the demands of farmers and ensuring food security.

Future Prospects

With this substantial equity boost, FCI is expected to implement transformative initiatives. The focus will be on enhancing procurement processes and improving storage facilities. This will facilitate timely and efficient handling of agricultural produce.

The infusion of ₹10,700 crore into FCI represents an important investment in India’s agricultural framework. It aims to address immediate challenges faced by farmers while laying the groundwork for long-term stability and growth in the agrarian economy.

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