Food ministry seeks Rs 16,200 cr bonds for FCI

The department of food and consumer affairs wants the finance ministry to issue the Food Corporation of India bonds worth Rs 16,200 crore, which though approved in March this year, are pending.

FCI has outstanding dues of around Rs 30,000 crore on account of borrowings from several banks.

The dues stem from costs incurred on procuring foodgrain for the public distribution system and for schemes like food for work, which are managed by the rural development ministry. FCI has to pay interest at the rate of 8.75 per cent on the borrowings every year.

The government had in March this year approved issuance of bonds totalling Rs 16,200 crore to help FCI repay a part of this borrowing. The bonds are intended to liquidate the dues of the rural development ministry to FCI.

"While we do not plan to seek more bonds at the moment, there is a likelihood that even after discounting for the bonds, the total dues of FCI, including interest payments, could increase to around Rs 30,000 crore by the end of the current fiscal," an official said.

In view of the losses, the food ministry is also pursuing the inclusion of a budgetary provision in the annual budget of the rural development ministry to pay FCI for lifting of foodgrains.

"At present, there is no separate budgetary provision to pay for foodgrain. Since the dues owed to FCI are piling up, the food ministry wants the rural development ministry to cater for this payment under a specific head," the official said.

The rural development ministry owed FCI over Rs 24,000 crore at the beginning of the current fiscal on account of foodgrain lifted for the food for work scheme and the Sampoorna Grameen Rozgar Yojana. A parliamentary committee had recently expressed concern over the increase in the dues of various central ministries to FCI.

"The committee does not approve of partial settlement of dues. The committee is of the view that since interest accrued on account of delayed payment is loaded on the Food Subsidy Bill, the government should find ways and means to liquidate their outstanding," the committee said in its report.