Government denies crisis at FCI

The government yesterday refuted charges of leaving Food Corporation of India (FCI) cash-strapped even as it claimed that there was no crisis at the state-run agency that is engaged in grain procurement from farmers at minimum support price.

"The corporation has to meet expenditure beyond the budget allocation due to bonus on wheat, rise in paddy procurement price and additional allocation etc. All the additional requirements of FCI are being met by the government," the food ministry said in a statement.

According to media reports, the FCI had requested the Cabinet Committee on Economic Affairs for early release of funds to the tune of Rs38,000 crore, in addition to the budgeted allocation of Rs47,239 crore.
Against the allocation under the budget, "the government has already released Rs12,000 crore to FCI in the first week of April 2011, and Rs4,000 crore in the first week of July 2011 to meet pressing requirements of procuring operations," the government stated in an official release, adding "Rs7,635.84 crore was released recently on 21 July, 2011 to FCI."

Government attributed the higher expenditure to the increase in bonus, which has pushed up FCI's fund requirements to Rs81,997 crore and Rs13,334 for states where procurement was managed locally.
Reports in the media had claimed that FCI was running a fund deficit of Rs11,000 crore currently. With a mandate to offer the minimum support price, FCI was obligated to buy grains that are brought to it.

However, the Times of India cited a finance ministry official as saying that there was no delay in release of funds to FCI. He added that the subsidy was released quarterly and the government released it for the current quarter last week.

He said almost half the amount was lying unutilised and the demand for more money was not justified without any supporting claims.