The centre underpaid the food subsidy\nbill to the Food Corporation of India (FCI) by as much as \u20b969,394\ncrore in order to meet the fiscal deficit target of 3.4% of gross domestic\nproduct (GDP) in 2018-19. This rollover of the food subsidy bill, which is 41%\nof the budget estimate, was the highest during the first five years of the\nNarendra Modi government.<\/p>\n\n\n\n
Of the total major subsidies, which\ninclude food, fertilizers and petroleum subsidies, only 74% was paid during\n2018-19 against 83% a year ago, according to the Controller General of Accounts\n(CGA).<\/p>\n\n\n\n
The underpayment of the food subsidy\nbill could push FCI into having to raise funds at a huge cost from external\nsources such as cash credit (CC) and short term loans from banks through open\ntenders and issue of bonds carrying interest. CC facility is provided by a\nconsortium of 63 banks led by the State Bank of India and is secured by a\nguarantee from the central government.<\/p>\n\n\n\n
FCI, established in\n1964, is the main agency for procuring food directly from farmers at the\nminimum support prices announced by the government from time to time. It also\nimplements the public distribution system and maintains buffer stocks of food\ngrains. The difference between the cost of FCI\u2019s overall operations and sales\nrealization through the public distribution system is reimbursed by the\ngovernment as the food subsidy bill. An audit of the FCI by the Comptroller and\nAuditor General (CAG) in 2017 revealed that it had to pay a huge amount of\ninterest on funds raised from external sources, as it did not get the food\nsubsidy reimbursement in time from the government. FCI also faces delays in recovering\nreceivables from ministries, departments and state governments.<\/p>\n\n\n\n
The short allocation of funds by the\nfinance ministry towards the food subsidy is because of the competing financial\npriorities of the government, FCI told CAG during the audit. \u201cThis compels FCI\nto seek financing from external sources (towards working capital), thus\nincreasing the interest burden, which gets added to the existing subsidy claims\nthereby increasing the claimable subsidy which is again followed by further\nshort receipt of subsidy from the ministry. This vicious cycle eventually leads\nto an increase in the overall food subsidy burden of the government of India,\nwhich at least to the extent of interest paid for external financing is\navoidable if timely subsidy claims were released by the ministry,” the\naudit report said.<\/p>\n\n\n\n
The CAG, in a separate report released\nin January this year, criticized the Narendra Modi government for borrowing\nthrough off-budget channels to finance capital and revenue spending in 2016-17,\na practice that masks the true extent of fiscal and revenue deficits.<\/p>\n\n\n\n
The government should consider\ninstituting a policy framework for off-budget financing, which should include a\ndisclosure about its rationale and objective to parliament, the report\nrecommended.<\/p>\n\n\n\n
Shifting subsidies to the next year\ncannot be a long-term solution, economic affairs secretary Subhash Chandra Garg\nsaid in an interview after the interim budget was tabled in Parliament on 1\nFebruary.<\/p>\n\n\n\n
\u201cIf one shifts expenditure from current\nyear to the next, the expenditure next year would have to be more. So no\nadvantage accrues through shifting. What CAG probably has said is sometime ago\nsome of the expenditure were met through issue of fertilizer bonds and oil\nbonds. This is not happening in last couple of years,” he said.\n\nGarg said that FCI is\nfully funded. \u201cThey have debt for working capital purposes and they should have\nit. But beyond that nobody is shifting anything to them to pay for the\ngovernment,” he said.\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"
The centre underpaid the food subsidy bill to the Food Corporation of India (FCI) by as much as \u20b969,394 crore in order to meet the fiscal deficit target of 3.4% of gross domestic product (GDP) in 2018-19. This rollover of the food subsidy bill, which is 41% of the budget estimate, was the highest during the […]<\/p>\n","protected":false},"author":13,"featured_media":2024,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[45],"tags":[],"class_list":["post-2023","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs-articles"],"_links":{"self":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/comments?post=2023"}],"version-history":[{"count":2,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2023\/revisions"}],"predecessor-version":[{"id":3378,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2023\/revisions\/3378"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media\/2024"}],"wp:attachment":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media?parent=2023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/categories?post=2023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/tags?post=2023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}