Union Cabinet approves infusion of ₹10,700 crore into FCI
Context:
Recently, the Union Cabinet approved a substantial equity infusion of ₹10,700 crore into the Food Corporation of India (FCI) for the fiscal year 2024-25.
- This move demonstrates the governments dedication and commitment to strengthen agricultural sector.
- It also highlights the fact that it not only increases the FCIs working capital but also strengthens India’s food security framework.
Relevance:
GS-02 (Government policies and interventions)
Need for Infusion
- Funding Gaps: Ever since FCIs inception in 1964 with a modest capital of ₹100 crore, all the way till reaching an authorised capital of ₹21,000 crore as of February 2024, it has been resorting to short-term borrowings to meet operational requirements.
- High interest rates: The FCIs short-term loans invite high interest expenses, indirectly impacting government subsidies.
- MSPs: The infusion shall meet FCIs mandate of procuring food grains at the Minimum Support Price (MSP) and also help stabilise market prices.
- Hence, the infusion of Rs 10,700 crore would address these challenges to strengthen FCI.
About FCI:
- It is a statutory body under the Food Corporations Act 1964.
- It was set up in 1965, against the backdrop of a major shortage of grains, especially wheat.
- It functions throughout the country with five zonal offices and 25 regional offices. Its head office is at New Delhi.
- Objectives:
- To help farmers get competitive prices.
- Help the country to strengthen food security by ensuring affordability, accessibility and availability of food grains
- It regulates the distribution of food grains through the public distribution systems.
- It also manages Effective Price Support Operations for safeguarding the interests of farmers.
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