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Resource centre on India's rural distress
 
 

A fiscal crisis: Why FCI needs provisioning in food subsidy budget -Sandip Das

-Down to Earth

Mounting expenses, under-provisioning of food subsidy budget leading to a huge debt is highly worrisome

A fiscal crisis has been brewing in the last few years. Mounting food subsidy arrears — payable to the Food Corporation of India (FCI) due to ‘under-provisioning’ of food subsidy expenses in successive union budgets — has forced FCI to take loans to finance its operations.

FCI is the central agency that manages procurement, storage and transportation of rice and wheat to states for distribution mainly for the National Food Security Act (NFSA) and other welfare schemes.

Around 810 million people get highly subsidised five-kilogramme foodgrains per head per month under NFSA. This includes around 2.5 crore Antyodaya Anna Yojana households, which constitute the poorest of the poor. They are entitled to 35 kg per household per month at subsidised prices.

The Union government has made provisions of raising loans from various sources such as the National Small Savings Fund (NSSF), Short Term Loans, Bonds and Cash Credit Limits (CCI) sanctioned by the banks for FCI to meet actual food subsidy expenses due to under-provisioning in the union budgets.

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