Owing to limited capabilities of the Food Corporation of India, the government agencies have not been able to procure food crops from the farmers leading to protests in Punjab and Haryana. Now, in order to strengthen the FCI, the Modi government approved equity infusion of Rs 10,700 crore for its working capital for the current fiscal.
The decision also comes when campaigning is in full swing in Maharashtra and Jharkhand. The news of strengthening the FCI is likely to have a positive bearing on the farmers in these poll bound states.
The decision approved by the Cabinet Committee on Economic Affairs is aimed at “bolstering the agricultural sector and ensuring the farmers welfare.”
This strategic move shows the government's steadfast commitment to supporting farmers and fortifying India's agrarian economy, said an official statement.
Explaining the economics of current decision, the officials explained that the FCI started its journey in 1964 with authorised capital of Rs 100 crores and equity of Rs 4 crores. Over the years, FCI operations increased manifold resulting in increase of authorised capital from Rs. 11,000 crores to Rs. 21,000 crores in February, 2023.
“The equity of FCI was Rs. 4,496 Crores in Financial Year 2019-20 which increased to Rs. 10,157 Crores in the Financial Year 2023-24. Now, Government of India has approved significant amount of equity of Rs. 10,700 Crores for FCI which will strengthen it financially and will give a big boost to the initiatives taken for its transformation,” the cabinet statement said.
“The infusion of equity is a significant step towards enhancing the operational capabilities of FCI in fulfilling its mandate effectively. FCI resorts to short term borrowings to match the gap of fund requirement. This infusion will help to lower the interest burden and will ultimately reduce the subsidy of Government of India,” the statement added.
FCI plays an important role in ensuring food security by procurement of food grains at Minimum Support Price (MSP), maintenance of strategic food grain stocks, distribution of food grains for welfare measure and stabilization of food grain prices in the market.