The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the increase in authorised capital of Food Corporation of India (FCI) from existing Rs 3,500 crore to Rs 10,000 crore.
This will reduce borrowings of FCI, save interest cost and reduce food subsidy in consequence, an official statement said. "With the increase of authorised capital, additional equity capital can be infused in FCI through the Union Budget to fund foodgrains stock perpetually held by FCI."
The operations of FCI require maintaining perpetual stock of foodgrains which needs to be funded by the government through equity or long-term loan.
The government provides equity to FCI for maintaining stocks. The present authorised equity capital is Rs 3,500 crore and paid-up equity capital as on March 31 was Rs 3,447.58 crore.
FCI was constituted under the Food Corporations Act 1964 to implement the government's food policy.
Its primary objective is to ensure minimum support price to farmers, maintain a buffer stock of foodgrains, and distribution of foodgrains under the National Food Security Act and other government welfare schemes. (ANI)