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Government considering proposal to raise Rs 40,000 crore through bonds

05 Aug 2015 Evaluate

With an aim to cover a shortage of funds for meeting food subsidy bill, the government is scrutinizing a proposal to raise Rs 40000 crore through long-term bonds from LIC to meet the subsidy arrears. In the financial year 2015, Subsidy arrears of state-run Food Corporation of India (FCI), the nodal agency for procurement and distribution of grains, stood at Rs 50,730 crore, and is estimated to be Rs 22,348 crore for current financial year.

Food minister Ram Vilas Paswan has said that this department is facing shortage of funds in disbursing food subsidy to FCI as well as to states on account of less allocation of funds in the Budget compared to the projected requirement.  Minister further stated that  the government has sanctioned a cash limit of Rs 54,495 crore and raised short- term loan of up to Rs 30,000 crore from Rs 20,000 crore and given 'Ways and Means Advance' of Rs 10,000 crore, to ensure smooth functioning of FCI. The government has taken several measures to make available sufficient funds to FCI 

For the current financial year 2016, the government has allocated Rs 97,000 crore as against the requirement of Rs 1,19,348 crore. The arrears are estimated to be Rs 22,248 crore. In the financial year 2015, the government had allocated Rs 97,000 crore against the projected requirement of Rs 1,47,730 crore for the 2014-15 fiscal. The shortfall was Rs 50,730 crore for last year.

In recent years, the government has increased the budgetary allocation for food subsidy, but due to budgetary constraints and other pressing financial commitments, allocation made is still insufficient to meet the actual requirement of funds, especially in respect of FCI.

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