State-run Food Corporation 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 Corporation is raising a loan because its subsidy arrears have touched Rs 58,650 crore, as on March 31, a source said.
"FCI intends to raise short-term loan of Rs 20,000 crore with greenshoe option from scheduled banks for one month/three months maturity," the company said in a tender document.
The last date for submission of bids is July 1.
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 lakh crore 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 financial year, 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.