Cabinet hikes FCI’s authorised capital nearly 3 times

The Union Cabinet Wednesday approved an increase in the authorised capital of Food Corporation of India (FCI) to Rs10,000 crore from Rs 3,500 crore. The move is expected to reduce borrowings of FCI and save its huge interest outgoes.

“With the increase of authorised capital, additional equity capital can be infused in FCI through Union Budget, to fund the foodgrains stock, perpetually held by FCI. This will reduce the borrowings of FCI, save interest cost of FCI and reduce food subsidy in consequence,” an official statement read. The statement was released after the Cabinet Committee meeting on Economic Affairs chaired by Prime Minister Narendra Modi.

The operations of Food Corporation of India require maintaining perpetual stock of foodgrains, which is funded by the Centre through equity or long term loan. The Centre provides equity to FCI for maintaining stocks. The present authorised equity capital of FCI is Rs 3,500 crore and paid up equity capital as on March 31, is Rs 3,447.58 crore.

The primary objective of FCI is to ensure minimum support price to farmers, maintain buffer stock of foodgrains and distribution of foodgrains under National Food Security Act and other welfare schemes of the government.