The Government of India has recently approved equity of ₹10,700 crore for Food Corporation of India (FCI), which will be used as working capital in the financial year 2024-25. It aims to boost the country’s agriculture sector and ensure the welfare of farmers.
Financing and Challenges of FCI Operations
- FCI procures food grains from farmers at Minimum Support Price (MSP) for the central pool and releases these through the Public Distribution System (PDS) at the central issue price fixed by the government.
- Issue prices often do not cover the total cost of procurement, movement, storage, and distribution, necessitating consumer subsidies, which are paid to FCI by the government.
Challenges of FCI
- Low share in direct procurement: Direct procurement by FCI accounts for less than 5%.
- Lack of effective storage: The warehouses owned by FCI continue to face leakage and poor quality stock.
- Transit Loss: The problem of loss during movement of food grains.
- Limited Utilization of Facilities: The facilities owned by FCI are not being fully utilized.
Recommendations of the Standing Committee
Some recommendations have been made to improve the functioning of FCI
- Assistance to State Governments: Assistance to state governments in developing the necessary infrastructure for effective procurement.
- Scientific storage measures: Use of scientific storage measures to prevent losses.
- Vigilance mechanism: Strengthening the vigilance mechanism by coordinating with the states.
Objectives of Food Corporation of India (FCI)
- FCI was established under the Food Corporation Act, 1964 and comes under the Ministry of Consumer Affairs, Food and Public Distribution.
Its major objectives are
- Procurement of food grains at Minimum Support Price (MSP) to protect the interests of farmers.
- Distribution of food grains throughout the country through Public Distribution System (PDS).
- Proper management of buffer stock of food grains to ensure national food security.