Delay in subsidy release added Rs35,000 cr to FCI's interest burden: CAG
05 August 2017
An excessive leveraging of short-term credit due to a delay in the release of government subsidy for foodgrain procurement caused a Rs35,701.81-crore interest burden on Food Corporation of India (FCI) in the past five years, according to the Comptroller and Auditor General (CAG) of India.
The CAG in its latest report presented in Parliament has pointed out that timely release of subsidy amount would have saved the state-run Food Corporation of India of Rs35,701.81 crore in interest outgo during the 2011-16 period.
The CAG also advised the FCI to approach a consortium of lenders through the ministry of food for allowing it to utilise short-term loan without wasting the cash credit limit.
Besides, the CAG report stated that the government should issue guarantees to FCI to issue bonds as it will help the food procurement agency tap cheaper funds.
"On an average, only 67 per cent of subsidy claimed was released by the Government of India over the last five years because of which FCI had to borrow from other costlier means of finance resulting in heavy interest burden of Rs35,701.81 crore during 2011-16," the CAG said in the report.
Against the Rs4,45,809.59 crore that FCI had claimed as subsidy between 2011 and 2016, it received only Rs3,00,675.88 crore from the ministry, says the report.
"Had the government paid the full amount of subsidy within the same financial year, there would not have been any need to take money from market sources and thus, additional interest could have been saved. This is a completely avoidable payment of interest," Principal Director and Auditor of CAG Ashutosh Sharma told reporters.
Sharma said that the situation had somewhat improved last year as the reimbursement during last year was slightly better.