FCI to raise Rs 30,000 crore short term loan an as outstanding food subsidy payment rise sharply
New Delhi, Dec 28:
In view of rising food subsidy arrears, Food Corporation of India (FCI) has raised Rs 30,000 crore as a short-term loan from consortium of banks including SBI and PNB to meet working capital requirements. The corporation, a key agency for procurement and distribution of foodgrains mostly wheat and rice, is facing a liquidity crunch as its subsidy arrears are estimated to cross Rs 58,000 crore by March 2016.
In 2014-15, the government had allocated Rs 92,000 crore as food subsidy, out of which Rs 91,995.35 crore was given to the FCI. The actual subsidy outgo during the year was Rs 1,02,476 crore. In the current fiscal, the government has allocated Rs 97,000 crore as subsidy to the FCI against the estimated bill of Rs 1,18,000 crore.
“FCI has finalised the tenders for Rs 30,000 crore as a short-term loan from 15 banks including State Bank of India and Punjab National Bank. The amount will be withdrawn in phases during the fourth quarter of the current fiscal,” an official said. So far, the whole subsidy amount of Rs 97,000 crore has been released and it has been utilised, the short-term loan is being raised for the working capital requirements.
The loan has been raised at average interest rate of 9.6% and is for the period of 150 days. Maximum amount of Rs 10,000 crore has been raised from PNB, followed by Rs 7,000 crore from SBI and remaining from others including public and private sector banks.
FCI has a cash credit limit of Rs 54,495 crore with a consortium of 67 banks at a rate of 10.51%. In addition, it can raise a short-term loan of up to Rs 30,000 crore by inviting tenders from the banks. FCI’s costs of procurement, storage and transportation have been rising steadily over the years, driven by the annual rise in the minimum support price and the excess grain stocks held by the corporation.
To the chagrin of FCI, the finance ministry, has rejected a food ministry proposal that the government be guarantor to the 10-year bonds proposed to be issued by LIC to bridge the FCI’s resource gap.
“The finance ministry has refused to provide guarantee to LIC bonds citing Fiscal Responsibility and Budget Management (FRBM) norms,” an official said. He added that an acute funds shortage could jeopardise the FCI’s grain procurement as well as distribution of the same under the public distribution system (PDS) from January onwards.