Rs 1.45 trillion extra resources for FCI’s capital needs, says govt

In an attempt to clear the air on the outlay of Rs 1.45 trillion shown as internal and extra budgetary resources (IEBR) for Food Corporation of India (FCI) in the Union Budget 2023-24 (FY24), the Centre on Tuesday said the figure represents an indicative estimate of short-term working capital requirement of the FCI.

It is to provide money for the cost of procurement and managing public distribution system (PDS) operation costs. Costs from these working capital requirements are included in the food subsidy released to FCI from the Budget, said an official statement.

The IEBR of FCI for FY24 — in line with the Budget documents — is projected to jump a staggering 164 per cent to nearly Rs 1.45 trillion, from the 2022-23 (FY23) Revised Estimates (RE) of Rs 55,000 crore.

According to the statement, this reflects FCI’s anticipation of higher levels of procurement, including incidental expenses, by reason of increased inventory of essential commodities in the year.

The Centre also said that food subsidy — which is the difference between the economic cost and central issue price — is released to FCI as a reimbursement from the Budget after essential commodities are made available for distribution via PDS outlets.

Pending receipt, FCI manages its working capital requirements, or the costs arising from procurement operations, establishment, freight, and storage inventory carrying charges by availing of cash credit from a consortium of banks, short-term loans (up to 90 days), ways and means advances, etc.

“Costs from working capital requirements are included in the food subsidy released to FCI from the Union Budget,” read the statement.

It further added that as part of the government’s commitment to budgetary transparency and proactive disclosure, the Budget documents for FY24 disclose indicative working capital requirements for FCI upfront in the next fiscal year.

The actual utilisation against the indicative estimate is expected to be need-based and in a phased manner.

“This has been a continuing arrangement made available to FCI. For instance, in the current FY23, the indicative IEBR outlay was Rs 89,425 crore in the Budget Estimates, which has been scaled down to Rs 56,935 crore in the RE, on account of lower carrying cost of reduced inventory,” said the statement.

The statement said that the government further reiterates that the provision for food subsidy in the Budget for FY24 is adequate to cover all anticipated costs of projected PDS requirement of essential commodities for distribution amongst beneficiaries.