Syllabus: GS3/ Economy
Context
- The Cabinet Committee on Economic Affairs (CCEA) has approved an infusion of equity of Rs.10,700 crore for working capital in FY 2024-25 in Food Corporation of India (FCI).
Food Corporation of India
- The Food Corporation of India was set up under the Food Corporations Act 1964, with authorized capital of Rs. 100 Crores and equity of Rs. 4 Crores.
- Objectives of the FCI;
- Effective price support operations for safeguarding the interests of the farmers.
- Distribution of foodgrains throughout the country for a public distribution system.
- Strategic food grain stocks: Maintaining satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security.
Challenges with FCI
- Storage Issues: Insufficient facilities lead to wastage.
- High Costs: Expensive procurement, storage, and distribution.
- Inefficiencies: Delays, corruption, and leakage in supply chains.
- Limited Crop Focus: Over-focus on rice and wheat impacts crop diversity.
- Financial Strain: Heavy subsidies create fiscal pressure.
Measures to Boost Effectiveness of FCI
The Standing Committee on Food, Consumer Affairs, and Public Distribution recommended:
- Decentralized Procurement: Encourage more states to adopt the Decentralized Procurement Scheme to reduce transportation costs and improve local distribution.
- Infrastructure Development: Assist state governments in creating adequate infrastructure for effective procurement and storage of food grains.
- Utilization of Storage Capacity: Maximize the use of FCI-owned storage facilities before resorting to hiring additional storage to minimize costs.
- Construction of Godowns: Expedite the construction of godowns, especially in northeastern states, Jammu and Kashmir, Andaman and Nicobar Islands, and Lakshadweep, to enhance storage capacity.
- Performance Evaluation: Conduct regular performance evaluations of the Decentralized Procurement Scheme to identify and address challenges.
Ways and Means Advance (WMA) – The equity has been infused by converting the Ways and Means Advance into equity. A Ways and Means Advance (WMA) is a temporary loan given by the government to the FCI to meet mismatches in government receipts and payments. |
Source: PIB
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