Cabinet approves ₹10,700 cr equity infusion into FCI to boost working capital & cut borrowing

The Cabinet has approved an equity infusion of ₹10,700 crore for the Food Corporation of India (FCI) for FY 2024-25 to boost its working capital and reduce reliance on short-term borrowings.

“This is a significant step towards enhancing the operational capabilities of FCI in fulfilling its mandate effectively,” Union Minister of Information and Broadcasting Ashwini Vaishnaw said during a cabinet briefing held on Wednesday.

The move is expected to enhance FCI’s operational capacity, enabling it to procure grains at Minimum Support Prices (MSP), maintain reserves, and stabilise market prices through welfare programs.

By reducing reliance on short-term borrowings, with the equity infusion, the government aims to cut FCI’s interest expenses and lower its subsidy burden.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, cleared this decision on November 6.

Founded in 1964 with an initial authorised capital of ₹100 crore and equity of ₹4 crore, FCI has grown substantially over the decades. By FY 2023-24, its equity rose to ₹10,157 crore, with its authorised capital reaching ₹21,000 crore in February 2023 to support expanded operations.

Vaishnaw noted that food subsidies to farmers surged over fourfold, from ₹5.15 lakh crore in 2004-2014 to ₹21.56 lakh crore in 2014-2024.

Additionally, the Cabinet also approved the PM-Vidyalaxmi scheme today. Under the scheme, students admitted to Quality Higher Education Institutions (QHEIs) will be eligible for collateral-free, guarantor-free loans from banks and financial institutions to cover tuition and other course-related expenses.