The purpose of an outlay of Rs. 1.45 lakh crore shown as Internal and Extra Budgetary Resources (IEBR) for Food Corporation of India (FCI) in Budget Estimate (BE) FY 2023-24 represents an indicative estimate of short term working capital requirement of FCI to defray costs of procurement/ managing PDS operations.
Food subsidy (difference between the economic cost and central issue price) is released to FCI on reimbursement basis from the Union Budget after essential commodities are made available for distribution through Public Distribution System (PDS) outlets. Pending its receipt, FCI manages its working capital requirements or the costs arising from procurement operations, establishment, freight, storage inventory carrying charges, etc., by availing cash credit from 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.
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 utilization against the indicative estimate is expected to be need based and 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 higher estimate for FY 2023-24 reflects FCI’s anticipation of higher levels of procurement including incidental expenses due to increased inventory of essential commodities in the year. 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.