New Delhi: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved an infusion of equity to the tune of Rs 10,700 crore in the Food Corporation of India (FCI) for working capital in the financial year 2024-25.  

"The decision is aimed at bolstering the agricultural sector and ensuring the welfare of farmers nationwide. This strategic move shows the government's steadfast commitment to supporting farmers and fortifying India's agrarian economy," a cabinet communique said.

The FCI started its journey in 1964 with an authorised capital of Rs 100 crore and equity of Rs 4 crore. The operations of the FCI increased manifold resulting in the increase of authorised capital from Rs 11,000 crore to Rs 21,000 crore in February 2023.

The equity of FCI was Rs 4,496 crores in the financial year 2019-20 which increased to Rs 10,157 crore in the financial year 2023-24.

Now, the government has approved a significant amount of equity of Rs 10,700 crore for FCI which will strengthen it financially and will give a big boost to the initiatives taken for its transformation, the statement said.

The FCI plays a pivotal role in ensuring food security by procurement of food grains at minimum support price (MSP), maintenance of strategic food grain stocks, distribution of food grains for welfare measures, and stabilisation of food grain prices in the market. The infusion of equity is a significant step towards enhancing the operational capabilities of the FCI in fulfilling its mandate effectively. FCI resorts to short-term borrowings to match the gap of fund requirements. This infusion will help to lower the interest burden and will ultimately reduce the subsidy of the government.

The government's dual commitment to MSP-based procurement and investment in FCI's operational capabilities signifies a collaborative effort towards empowering farmers, fortifying the agricultural sector, and ensuring food security for the nation, the statement added.

(IANS)