Cash-strapped FCI asks govt to clear dues worth Rs 50,000 cr

New Delhi: Faced with liquidity crunch, Food Corporation of India (FCI) has in a letter to the Food Ministry asked the government to clear dues of Rs. 50,000 crore in a phased manner, according to sources.

The state-run company has also asked the government to allow it to securitise the dues for raising funds from markets, they said.

The dues have accumulated to Rs. 50,000 crore at the end of 2013-14 due to lesser allocation of funds against the estimated subsidy bill in last three-four years, according to one of the sources.

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“FCI’s food subsidy dues at the end of 2013-14 had touched Rs. 50,000 crore as government has allocated 60-80 per cent of the estimated subsidy bill only in the last three-four years,” a source said.

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In the current fiscal year, the cash-starved nodal agency for public distribution of food grain, had raised a short-term loan of Rs. 20,000 crore twice for smooth procurement and distribution.

Its long-term borrowings at the moment are about Rs. 72,000 crore.

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

“Out of FCI’s total capital, the paid-up capital is about 2 per cent, while 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 source added.

Besides arrears, the delay in subsidy payments is also adversely impacting FCI.

FCI’s subsidy has risen sharply in the last few years due to 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.

While in 2013-14, economic costs of both wheat and rice have gone up to Rs. 1,932.39 per quintal and Rs. 2,638.54 per quintal, respectively.

PTI