Union cabinet approves Rs 10,700 crore equity infusion in Food Corporation of India

The Cabinet Committee on Economic Affairs (CCEA) has approved an equity infusion of Rs. 10,700 crore into the Food Corporation of India (FCI) for the financial year 2024-25. This move aims to strengthen FCI’s financial position, supporting its vital role in India’s agricultural sector and in ensuring food security. This decision was made during a Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday.

According to a press release from the Ministry of Consumer Affairs, Food & Public Distribution, this equity infusion will be achieved by converting FCI’s existing Ways and Means Advance into equity. This strategic decision demonstrates the government’s strong commitment to supporting the agricultural sector and improving the welfare of farmers across the country. It is expected to help FCI manage its financial needs more effectively, reducing reliance on short-term borrowing and decreasing interest costs, which will ultimately reduce government subsidies.

Established in 1964, FCI began with an authorized capital of Rs. 100 crore and initial equity of Rs. 4 crore. Over the years, as FCI’s responsibilities expanded, its authorized capital increased from Rs. 11,000 crore to Rs. 21,000 crore in February 2024. FCI’s equity rose from Rs. 4,496 crore in 2019-20 to Rs. 10,157 crore in 2023-24, with the new approval raising it further by Rs. 10,700 crore.

FCI plays a central role in India’s food security by procuring food grains at Minimum Support Prices (MSP), maintaining strategic grain reserves, stabilizing market prices, and distributing food grains for welfare programs. The equity infusion will bolster FCI’s operations, allowing it to better fulfill its mission of supporting farmers, managing grain supplies, and ensuring stable prices in the market.