Cabinet approves infusion of Rs 10,700 crore equity in FCI in FY25

The decision is aimed at enhancing the operational capabilities of FCI in fulfilling its mandate effectively

The government has approved an infusion of Rs 10,700 crore equity in the Food Corporation of India (FCI) in FY25. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi.

 

At the briefing, Union minister Ashwini Vaishnaw stated, "Cabinet approves infusion of equity of Rs 10,700 crore for working capital in financial year 2024-25 in Food Corporation of India (FCI).” He added, “In the last 10 years, the scale of FCI operations has expanded due to the increase in Minimum Support Price (MSP) and procurement of food grains." 

 

The decision aims to enhance the operational capabilities of FCI to fulfil its mandate effectively.

 

FCI typically resorts to short-term borrowings to address funding requirements. This equity infusion is expected to reduce FCI’s interest burden, ultimately lowering the government’s subsidy burden.

 

Role of FCI

 

FCI procures food grains at MSP, maintains strategic food grain stocks, and distributes them for welfare measures and price stabilisation in the market, playing a crucial role in food security.

 

The main functions of FCI include procurement, storage and preservation, movement, and distribution of food grains across the country. It plays a vital role in meeting the objectives of the National Food Security Act and bridges the regional gap by procuring nearly 60 per cent of grains from surplus regions and transferring them to deficit regions.

 

Journey of FCI

 

FCI started its journey in 1964 with an authorised capital of Rs 100 crore and an equity of Rs 4 crore. Over the years, its operations have expanded significantly, leading to an increase in authorised capital to Rs 21,000 crore in February 2023. The equity of FCI reached Rs 10,157 crore in FY24.

 

Now, with the government’s approval of an additional equity infusion of Rs 10,700 crore, FCI is set for a significant financial boost, strengthening its capacity and furthering its transformation initiatives.