Additional Rs 1.45 lakh-cr budget for FCI is indicative estimate; food subsidy ‘adequate’ for procurement: Govt

New Delhi: An extra-budgetary provision of Rs 1.45 lakh crore made to state-run FCI in the Budget for 2023-24 fiscal is an “indicative outlay” of short term working capital, otherwise the food subsidy outlay made for the agency is “adequate” to cover all the anticipated procurement costs for PDS, according to the food ministry.

Food Corporation of India (FCI) is the Centre’s nodal agency for procurement and distribution of foodgrains through the Public Distribution System (PDS). The difference between the economic cost and central issue price of foodgrains is paid as a food subsidy to the agency.

A big part of the Union government spending comes from outside the Budget, which is referred to as internal

and extra-budgetary resources (IEBR).

IEBR constitutes the resources raised by public sector units through profits, loans and equity. An IEBR provision of Rs 1.45 lakh crore has been made for FCI in the Budget for the 2023-24 financial year.

According to the ministry, “The purpose of an outlay of Rs 1.45 lakh crore shown as Internal and Extra Budgetary Resources (IEBR) for FCI in the Budget Estimate (BE) FY’2023-24 represents an indicative estimate of short-term working capital requirement of FCI to defray costs of procurement/managing PDS operations.” The ministry explained that food subsidy is released to the FCI on reimbursement

basis from the budgeted outlay after procurement and distribution of essential

commodities through the Public Distribution System.

Pending its receipt, FCI manages its working capital requirements or the costs arising from procurement operations, establishment, freight, storage inventory carrying charges by availing the cash credit.