New Delhi: State-run Food Corp. of India (FCI) has invited bids from scheduled banks for raising short-term loan of Rs.20,000 crore to meet the cost of procurement.
The FCI is raising the loan because its subsidy arrears have touched Rs.58,650 crore as on 31 March, a person with knowledge of the matter said.
“FCI intends to raise short-term loan of Rs.20,000 crore with greenshoe option (the borrowing through STL will not exceed Rs.30,000 crore at any point of time) from scheduled banks for one month/three months maturity,” the company said in a tender document.
The last date for submission of bids is 1 July. The government had earlier said that to bring down the subsidy arrears in this fiscal, it may consider additional food subsidy over and above the budgetary provision, if required.
The bulk of the subsidy is paid to FCI for buying foodgrains at support price and running the public distribution system (PDS). The PDS operation cost has risen sharply in the past few years due to increase in the minimum support price (MSP) of grains as well as high storage costs.
The FCI also has a cash credit limit of Rs.54,495 crore with a consortium of 67 banks. The government has earmarked Rs.1,34,834.61 crore as food subsidy for 2016-17, out of which about Rs.1.03 trillion is for FCI.
In the 2015-16 period, the government had initially allocated Rs.97,000 crore to FCI, which was later increased to Rs.1,12,000 crore at the revised estimate stage. In the current fiscal, the centre has released Rs.25,834 crore as food subsidy to the corporation and another Rs.10,000 crore as a wage and means advance.