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Govt to restructure FCI capital to enhance equity, raise long-term debt
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Thursday, 22 March, 2018, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The Government of India will restructure the capital of the Food Corporation of India (FCI) to enhance equity and raise long-term debt. This was stated by finance minister Arun Jaitley in his Budget speech for financial year (FY) 2018-19. The step will help the corporation meet its standing working capital requirement.
For that, the capital requirement for holding the stocks shall be pegged at Rs 50,000 crore. Of this, Rs 45,000 crore will be financed through borrowed capital and the remainder through equity infusion. The equity of Rs 5,000 crore will be infused in FCI over two years.
“FCI is already holding bonds worth Rs 13,000 crore. Further, a bond of Rs 32,000 crore shall be raised by FCI through government-guaranteed bonds,” stated the Parliamentary Committee on Food and Public Distribution in its report, tabled in Parliament recently.
“The Committee hopes that with the infusion of more capital, FCI, the government’s nodal agency for the procurement and distribution of foodgrains, would be able to improve performing its mandate while discharging its functions,” it added.
However, it has expressed its displeasure over the outstanding dues of FCI from several government agencies.
The report pointed out that the outstanding dues of FCI from the ministry of rural development against the foodgrains supplied under the Sampoorna Grameen Rojgar Yojana (SGRY) Scheme upto March 31, 2008 amounted to Rs 2,452.96 crore; those from the ministry of human resource development against the foodgrains supplied under the Mid-day Meal (MDM) Scheme as on December 31, 2017 amounted to Rs 248.87 crore and those from the ministry of external affairs against wheat issued to the World Food Programme (WFP) for the supply of fortified biscuits to Afghanistan under the Government of India’s donation to Afghanistan till date amounted to Rs 47.99 crore.
The Committee stated that the interest accrued on account of delayed payment was also loaded on the food subsidy bill of the Government, which was already very high, and urged the department/FCI to take the required steps for the expeditious settlement of outstanding dues from the various Central ministries, not only to prevent the undue burden on the Food Subsidy Bill, but also to utilise the funds for other important development schemes of the Government.
It was also miffed over the utilisation of FCI’s storage capacity, which was also putting a financial burden on the corporation. It said that the percentage utilisation of covered/owned storage capacity of FCI was 64 per cent, whereas that of covered/hired storage capacity was 85 per cent. It also asked FCI to reassess the storage needed.
“While not fully utilising its owned storage capacity, FCI incurred an expenditure amounting to Rs 5,611.76 crore over the last three years for hiring godowns from private agencies. The committee is of the view that the proper utilisation of owned capacity before resorting to hiring godowns from private agencies is desirable as it would save the avoidable expenditure of precious funds. It, therefore, recommends that FCI should reassess their requirement of storage space and utilise their owned capacity to the maximum before hiring storage space,” the report stated.
Further, the committee took a serious view on FCI functioning and its ability to curb losses of foodgrains. The report said that despite various measures taken by FCI to curb the losses of foodgrains in storage and transit, the value of foodgrains lost by FCI during the year 2017-18 continued to be as high as Rs 13.14 crore and Rs 206.64 crore on account of storage and transit losses, respectively.
“The steps so far taken by FCI to prevent storage and transit losses of foodgrains are not adequate or effective. The committee, therefore, desires that FCI should adopt the latest scientific and modern technology as well as the introduction of silos for storage of foodgrains to minimise the storage and transit losses of foodgrains,” it added.
“The committee also desires that besides the installation of CCTV cameras in all FCI godowns, the number of regular inspections/surprise checks may be increased. This will result in a reduction in the number of transit and pilferage losses of foodgrains,” the report said.
Meanwhile, the committee stated it was constrained to observe that the amount of food subsidy released to FCI was constantly increasing over the years and the Budget Estimate of 2018-19 now stands at Rs 1,38,123 crore against the actual expenditure of Rs 1,04,901.15 crore during the year 2017-18.
“The committee, therefore, desires that the department should make even more vigorous efforts to explore the possibility of containing food subsidy while ensuring regular supply and availability of subsidised foodgrains to the targeted beneficiaries under the National Food Security Act (NFSA) or Other Welfare Schemes (OWS) of the country,” the report said.
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