Cabinet approves hike in FCI's authorised capital to ₹10,000 crore1 min read . Updated: 27 Nov 2019, 11:52 AM IST
- This will reduce the borrowings of FCI, save interest cost of FCI and reduce food subsidy in consequence
The Cabinet Committee on Economic Affairs today approved an increase in the authorised capital of Food Corporation of India (FCI) to Rs10,000 crore from ₹3,500 crore. With the increase of authorised capital, additional equity capital can be infused in FCI through the Union Budget, to fund the foodgrains stock. This will reduce the borrowings of FCI, save interest cost of FCI and reduce food subsidy in consequence, a government release said.
The move will help FCI raise more money in the market and comes in the backdrop agency’s request for capital infusion.
According to reports, last week, Minister of State of Consumer Affairs, Food & Public Distribution Danve Raosaheb Dadarao informed Parliament that FCI has requested equity capital infusion.
“As against equity infusion plan of ₹5,000 crore, the government has already released ₹500 crore during the financial year 2018-19. Release of balance ₹4,500 crore would be considered once the authorised capital of FCI is enhanced from present level of ₹3,500 crore to ₹10,000 crore," reports quoted Dadarao as saying in a reply to a question in Lok Sabha.
The Centre provides equity to FCI for maintaining stocks. The paid up equity capital as on March 2019 was ₹3,447.58 crore.
FCI was constituted under the Food Corporations Act, 1964, to implement the government’s food policy. Its primary objective is to ensure minimum support price to farmers, maintain buffer stock of foodgrains and distribution of foodgrains under the National Food Security Act and other state-run welfare schemes.