Indira Rajaraman’s article ‘The Macro-Economic Landscape Changes Over the Last Month’ published in Mint on 3rd March 2023 states that the estimated borrowing by the Food Corporation of India (FCI) is 1.05 trillion from the National Small Savings Fund (NSSF). This statement is factually incorrect. There will be no borrowing from NSSF by FCI during 2023-24 and in fact no such borrowing after 2020-21. Page 62-63 of the Receipt Budget 2023-24 details the deployment of NSSF, from which it can be seen in item 3(v)(a) that the deployment in FCI is nil in the financial year 2021-22, 2022- 23 and 2023-24.
provision of 1.05 trillion pertains to operational working capital arrangements made by FCI through banks to meet temporary cash requirements for purchases and inventory-carrying costs. This amount represents the peak expected level of balance during the financial year and is not necessarily the final balance. This amount is projected to increase in 2023-24 as inventory levels are expected to increase significantly. The inventory was at a low level in 2022-23 and is expected to increase significantly in 2023-24 due to increase in food grain procurement on one hand and restructuring of PM Garib Kalyan Anna Yojana on the other. It can be seen from page 59 of Expenditure Budget 2023-24 that a provision A provision of Rs 89,425 crore was made for the same purposes in the Budget Estimates 2022-23. 63,395 crore was also shown in the actual of 2021-22. This is not “off-budget borrowing” by any means. The cost of such short-term working capital requirement is included in the food subsidy.
Even in the year 2020-21 when 1.37 trillion provided to FCI through NSSF (as can be seen from page 63 of Receipt Budget 2021-22), amounting to 2.22 trillion was indicated separately for such working capital requirements (Statement 26 of the Expenditure Profile 2021-22).
with respect to the sum of 40,000 crores mentioned in the article, this reflects the estimated peak level of short-term miscellaneous dues to suppliers and contractors, including state governments, labour, transport, handling and storage contractors. Actual levels may fluctuate from time to time.
The article appears to have been written without knowledge of Press Release ID No. 1896963 dated 7 February 2023 (which can also be seen at bit.ly/3SRRl2F) of the Press Information Bureau. As explained therein, food subsidy is released on reimbursement basis when the commodities are distributed through the Public Distribution System. During the time between procurement and delivery, FCI manages its working capital through bank loans. Working capital levels fluctuate based on inventory levels and interest thereon is paid as part of the food subsidy.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.