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In an attempt to infuse the additional capital in its state-owned company, the Government of India has increased the authorised capital of Food Corporation of India (FCI) to Rs 10,000 crore from Rs 3,500.
According to the officials, “The decision to increase the FCI’s authorise capital was approved in the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister of India Narendra Modi.”
The statement by the official said, “The increase in the authorised capital, will allow infusing the additional equity capital in the FCI through Union Budget. To fund the foodgrains stock, perpetually held by the FCI.”
“This will reduce the borrowings of the FCI, save its interest cost and reduce food subsidy,” the statement added.
FCI was constituted under the Food Corporations Act 1994 to ensure the Minimum Support Price (MSP) to farmers and to maintain a buffer stock of foodgrains besides the distribution of foodgrains under the National Food Security Act and other welfare schemes of the central government.
Further adding to the statement, the official said that “The operations of the FCI require maintaining perpetual stock of foodgrains which needs to be funded by the Government of India through equity or long-term loan.”