Stating that Food Corporation of India's interest cost and tax liability inflate food subsidy amount, a Parliamentary panel has asked the government to reimburse these spends under a separate head to give a more realistic picture.
"The committee desires that the government should examine the desirability of reimbursing to FCI interest on borrowings, taxes, etc. Under a separate head, different from the head of food subsidy so that a realistic figure of food subsidy is available for information of Parliament and the public," a committee on public undertakings said in a report.
The report, which was tabled today in both the houses, said that Food Corporation of India (FCI) has to incur huge interest burden every year on loans taken from banks due to delay in release of food subsidy by the government.
"Huge interest burden along with substantial and varying amounts of taxes levied by the state government on the procurements made by FCI and other agencies for a central pool form a significant part of economic cost of the corporation and unjustifiably inflate food subsidy...," the report added.
The annual interest payment during the eleventh plan (2007-08 to 2011-12) ranged from Rs 2,448 crore to Rs 5,227 crore, the report said, adding that the figure reached to Rs 6,273 crore in 2012-13.
Besides interest, FCI has to shell out significant amounts of money as state taxes and levies. "The committee notes with concern that during the fiscal 2012-13, the corporation paid Rs 7,481 crore as state taxes and levies".
FCI was established in 1985, with the primary task of undertaking the purchase of foodgrains by ensuring effective price to the farmers and ensure required supply of food grains at cheaper rates throughout the country.
