The government is planning to invest Rs 5,000 crore in food grains supply and distribution body - Food Corporation of India over a period of next 24 months to tackle the liquidity issue and bring operational efficiency in the organization.
The public body is also expecting Rs.32,000 capital raise via bonds guaranteed by government. J C Divakar Reddy who heads the Parliamentary Standing Committee on Food and Public distribution has reportedly seen the budget proposal to realign the planned investment by FCI to boost equity and arrange for long-term debt to plug-in the capital requirements.
“The Ministry of Finance has decided that the capital requirement for holding the stocks shall be pegged at Rs.50,000 crore, of which Rs.45,000 crore shall be financed through borrowed capital and Rs.5,000 crore through equity infusion,” the report stated.
It added that the FCI will see equity-based investment worth Rs.5,000 crore over next two years. Based on current bonds structure, FCI holds bonds of Rs.13,000 crore in value. However, it would be looking to inject additional capital of Rs.32,000 crore via government-guaranteed bonds. The capital is equity-based since FCI is governed by a special Act of Parliament instead of the Companies Act.
FCI has been directed to take preventive measures for clearing its outstanding dues from different central ministries that otherwise might put food subsidy bill under stress.
Highlighting the outstanding dues, the panel underscored Rs.2,45,296 crore which the Rural Development Ministry owe followed by the HRD and External Ministry that owes Rs.248.87 crore as on December 2017 and Rs.47.99 crore so far, respectively.
FCI’s mandate includes looking at purchases, movement, transport, distribution and sale of food grains. The body procures food grains at government rates to be supplied to states for public distribution system at subsidized rates.