Faced with severe shortage of funds to meet the food subsidy bill, the Government on Tuesday said it is examining a proposal to raise Rs40,000 crore via long-term bonds from lIC to liquidate the subsidy arrears.Subsidy arrears of state-run Food Corporation of India (FCI), the nodal agency for procurement and distribution of grains, stood at Rs50,730 crore in 2014-15 fiscal, and is estimated to be Rs22,348 crore this year.
“Owing to less allocation of funds in the Budget compared to the projected requirement, this Department is facing shortage of funds in disbursing food subsidy to FCI as well as to states,” Food Minister Ram Vilas Paswan said in a written reply to the lok Sabha.He said that the government has taken several measures to make available sufficient funds to FCI and at present is considering a proposal to raise Rs40,000 crore through issue of bonds from life Insurance Corporation of India (lIC).
“A proposal for the issue of government guaranteed bonds of loan of Rs40,000 crore to lIC against arrear subsidy is under examination,” he said.To ensure smooth functioning of FCI, the government has sanctioned a cash limit of Rs54,495 crore and raised short- term loan of up to Rs30,000 crore from Rs20,000 crore and given 'Ways and Means Advance' of Rs10,000 crore, he said.