The fund will be used as working capital in the financial year 2024-25 by Food Corporation of India (FCI).

• The decision is aimed at bolstering the agricultural sector and ensuring the welfare of farmers nationwide.

Financing of FCI operations

• FCI purchases the food grains for the Central Pool at the procurement prices ( known as Minimum Support Price) and issues the same at the Central Issue Prices fixed by the Government of India.
  • The issue prices do not cover the full economic cost incurred by the Corporation in the procurement,movement, storage and distribution of food grains.
• The difference represents the consumer subsidy for the Public Distribution System, and is paid to the Corporation by the Government of India.

Challenges with FCI: Low share in direct procurement (less than 5%), FCI-owned facilities remain under-utilised, Leakages in godowns, procurement of poor quality stocks and transit loss, etc.

Recommendations given by standing committee to improve FCI functioning

• It can assist the state governments in creating adequate infrastructure for effective procurement.
• Adoption of adequate scientific storage measures to prevent any damage.
• Strengthen its vigilance mechanism in coordination with states.