Huge losses on procured grains and rising debt are a big concern
FCI (Food Corporation of India) is sitting on a mountain of wheat and paddy. In January, the total stock of rice and wheat with FCI was 45.4 million tonnes. This increased to 46.3 million tonnes by April and touched 62.2 million tonnes in May. In July, the stock increased further to 74.2 million which was significantly higher than the buffer norm requirement of 41.12 million tonnes of grain as of July.
Increase in procurement through MSP operations in the kharif marketing year 2018-19 in rice and rabi marketing year 2019-20 in wheat, explain the jump in stocks with FCI to record levels. Higher inventory means higher storage and financing costs for FCI and a higher food subsidy bill for the Centre.
The cash-strapped government has already not been paying FCI. In fact, over the last three years, the government has only been arranging loans for FCI from the National Small Savings Fund for a large part of its dues to the corporation on procurement. In 2018-19, FCI’s borrowing from NSSF stood at a record 1.91 lakh crore.
So why does the FCI keep accumulating stock and not dispose it in the market, to lower its burden?
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