Cash-starved FCI asks government to settle Rs 50,000 crore dues

Cash-strapped Food Corporation of India (FCI) has requested the government to start clearing its dues amounting to a staggering Rs 50,000 crore in a phased manner.

FCI has informed the food ministry that dues on the food subsidy bill have piled up to Rs 50,000 crore at the end of 2013-14 over the last three-to-four years as it has not been allocated enough funds, sources said.

According to sources, FCI has also asked the government to allow it to scrutinise the dues for raising funds from the markets. FCI's food subsidy dues at the end of 2013-14 had touched Rs 50,000 crore as the government has allocated 60-80 per cent of the estimated bill only in the last three-four years. The delay in subsidy payments is also hampering FCI's operations.

FCI's subsidy has risen sharply in the last few years due to the increase in the minimum support prices (MSP) for wheat and rice and high procurement, storage and distribution costs.

The economic costs comprising MSP, procurement, storage and distribution for wheat stood at Rs 1,494.35 per quintal and that of rice were at Rs 1,983.11 per quintal in 2010-11. In 2013-14, economic costs of both wheat and rice had gone up to Rs 1,932.39 per quintal and Rs 2,638.54 per quintal respectively.

In the current fiscal, the cash-starved nodal agency for public distribution of foodgrains had raised short-term loan of Rs 20,000 crore twice for smooth procurement and distribution of foodgrains. Its longterm borrowings are about Rs 72,000 crore.

Earlier, the corporation had also requested the government to raise its paid-up capital to about Rs 15,000 crore from Rs 2,675.95 crore as on March 31, 2014, which is about two per cent of the total capital.

Out of FCI's total capital, 98 per cent is the loan capital. So, in long-term perspective for ending this liquidity crisis, it will be better to increase the paid-up capital in the corporation, the sources added.