NEW DELHI: The government’s higher allocation for the Food Corporation of India (FCI) – nearly 450% increase in the current financial year compared to the budget estimate – will reduce the interest burden of the government entity by nearly Rs 17,000 crore in 2021-22. This will also bring down the economic cost of the foodgrains that FCI procures, stocks and transports for distribution to nearly 82 crore beneficiaries under the national food security act.
Sources said the average economic cost of wheat will decline by nearly Rs 300 per quintal in the case of wheat and Rs 400 per quintal for rice. They added that had the government not increased the budgetary allocation for food subsidy to FCI from Rs 78,000 crore to Rs 3.44 lakh crore during 2020-21, the interest burden of FCI on the loan it has taken would have increased to Rs 32,000 crore in the next financial year.
“It’s a very bold step by the government. The higher allocation proposed for 2021-22 at Rs 2.02 lakh crore will reduce our outstanding loan and it’s very crucial for the finances of the organisation, which plays the most important role in food security,” said a government official. According to official data, the total loan taken from National Small Savings Fund (NSSF) has kept increasing from only Rs 90,000 crore in 2015-16 to Rs 2.53 lakh crore in 2018-19. This year it touched Rs 3.5 lakh crore.
Last week while replying to the budget discussion, Union finance minister Nirmala Sitharaman had said, “Their (FCI) outstanding loans from NSS, that is, National Savings Scheme, are estimated to be reduced from Rs 3.39 lakh crore to Rs 1.19 lakh crore by the end of the current financial year and to only Rs 0.58 lakh crore by the end of the next of financial year. The government has been completely responsible and careful to repay the debts which are taken by the FCI from the NSSF.”
Sources said the government’s decision to distribute additional foodgrains free of cost during the Covid pandemic also helped the FCI to free up space to keep the foodgrains being procured now. They said storage space to stock around 31.2 million tonnes of foodgrains was cleared. “Had this not happened, we would have a huge problem by now.
The total stock of wheat and rice with FCI as on February 1 is estimated to be 82.2 million tonnes, which is much higher than what the corporation needs to keep in the stock for operational and strategic purposes.