FCI needs Rs 85,359 cr to pay for procurement, clear dues

Accepting that the country’s main foodgrain procurement and distribution agency, Food Corporation of India (FCI) is facing a financial crunch because of record procurement of wheat and rice at high prices, the government today said the Corporation needs Rs 85,359 crore in the current financial year, to pay for procurement of foodgrain and clear dues.

“Due to shortfall in allocation for the current year, arrears of past years, additional requirement due to declaration of bonus on procurement of wheat, increase in minimum support price of paddy and additional allocations of foodgrains, the total requirement of subsidy for FCI is now estimated at Rs 85,359 crore,” food minister K V Thomas said during Question Hour in the Rajya Sabha.

The Budget had pegged the subsidy requirement of FCI at just over Rs 60,000 crore. “The matter has been taken up with Ministry of Finance for allotment of additional subsidy for FCI. “It is a fact that there is a financial crunch but we are managing the situation,” Thomas said. After the passage of the Food Security Bill, annual food subsidy will rise to Rs 1 lakh crore. In July-September quarter, FCI needed about Rs 11,635 crore for payments to be made for procurement of foodgrains. “Against this, initially we had only Rs 4,000 crore (and) later the Finance Ministry released Rs 7,635 crore and all the dues have been paid,” he said. As procurement is higher this year because of high food production, FCI requires Rs 85,359 crore.

To meet this, the cash-credit limit of FCI with banks is being enhanced to Rs 50,000 crore from the current Rs 35,000 crore. Besides, the Finance Ministry is being requested to earmark more funds in the coming Budget.

India’s wheat procurement in 2011-2012 is estimated to be 27 million tonnes, while procurement of rice is estimated to be 30 million tonnes.