The government on Wednesday increased the authorised capital of Food Corporation of India (FCI) to Rs 10,000 crore from Rs 3,500 crore, paving the way for additional equity infusion in the state-owned firm.
The decision would also help FCI, the government's nodal agency for procurement and distribution of food grains, in reducing its debt and interest cost.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the proposal to increase the authorised capital of FCI.
"With the increase of authorised capital, additional equity capital can be infused in FCI through Union Budget, to fund the food grains stock, perpetually held by FCI," an official statement said.
This will reduce the borrowings of FCI, save its interest cost and reduce food subsidy, it added.
"The operations of FCI require maintaining perpetual stock of food grains which needs to be funded by the Government of India through equity or long-term loan," the statement said.
The Centre is providing equity to FCI for maintaining stocks. The present authorised equity capital of the Corporation is Rs 3,500 crore and paid up equity capital as on March 31, 2019 is Rs 3,447.58 crore.
FCI was constituted under the Food Corporations Act, 1964, to implement the food policy of the government.
Its primary objective is to ensure Minimum Support Price (MSP) to farmers, maintain buffer stock of food grains besides distribution of food grains under National Food Security Act and other welfare schemes of the central government.