The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved the increase of authorized capital of Food Corporation of India (FCI) from existing Rs.3,500 crore to Rs.10,000 crore.
With the increase of authorized capital, additional equity capital can be infused in FCI through Union Budget, to fund the food grains stock, perpetually held by FCI. This will cut the borrowings of FCI, save interest cost of FCI & reduce food subsidy in consequence.
Reason for this Increase?
The operations of Food Corporation of India require maintaining perpetual stock of food grains that needs to be funded by the Govt. of India through equity or long term loan. The Govt. of India is providing equity to FCI for maintaining stocks. The present authorized equity capital of FCI is Rs.3,500 crore and paid-up equity capital as on 31.03.2019 is Rs.3,447.58 crore.
Food Corporation of India was constituted under the Food Corporations Act, 1964, to implement the food policy of the Government of India. Its primary objective is to ensure Minimum Support Price to farmers, maintain a buffer stock of food grains and distribution of food grains under the National Food Security Act and other welfare schemes of Govt. of India.
