FCI’s internal resources point to short-term capital needs for FY24: Centre

In an attempt to clear the air on an entry of Rs 1.45 trillion in the Internal and Extra Budgetary Resources (IEBR) of the Food Corporation of India in the recent Budget, the Centre said on Tuesday that the amount is an indication of the Corporation’s short-term working capital requirement.

In other words, that is the money needed to procure food and manage the cost of PDS operations. The costs arising from these working capital requirements are included in the food subsidy released to FCI from the Union Budget, an official statement said.

FCI’s IEBR for FY24, according to Budget documents, is projected to jump by a staggering 164 per cent to almost Rs 1.45 trillion, from the FY23 Revised Estimate of Rs 55,000 crore.

This, according to the statement, reflects FCI’s anticipation of higher levels of procurement, including incidental expenses due to increased inventory of essential commodities in the year.

The Centre also said that food subsidy, which is the difference between the economic cost and central issue price, is released to FCI on a reimbursement basis from the Union Budget after essential commodities are made available for distribution through Public Distribution System (PDS) outlets.

However, pending its receipt, FCI manages its working capital or the costs arising from procurement operations, establishment, freight, storage inventory carrying charges, etc, by availing cash credit from a consortium of Banks, short-term loans (up to 90 days), ways and means advance, etc.

“Costs from working capital requirements are included in the food subsidy released to FCI from the Union Budget,” the statement said.

It added that as part of the government’s commitment to budgetary transparency and proactive disclosure, the budget documents for FY 2023-24 discloses an indicative working capital requirements for FCI during the next FY upfront.

The actual utilisation against the indicative estimate is expected to be need-based and will be done in a phased manner.

“This has been a continuing arrangement made available to FCI. For instance, in the current FY 2022-23, the indicative IEBR outlay was Rs 89,425 crore in the Budget Estimates, which has been scaled down to Rs 56,935 crore in the Revised Estimates, on account of lower carrying cost of reduced inventory,” the statement said.

The statement said the government further reiterates that the provision for food subsidy in the Budget for FY 2023-24 is adequate to cover all anticipated costs pertaining to projected PDS requirement of essential commodities for distribution amongst the beneficiaries.

FCI’s Internal and Extra Budgetary Resources (IEBR)
In Rs crore
2021-22*	2022-23**	2022-23***	2023-24**
60,889.64	87495	55000	145000
Source: Budget papers