Food Corporation of India (FCI) Part- III

The Food Corporation of India was set up under the Food Corporations Act 1964, in order to fulfil the following objectives of the Food Policy:

  • Effective price support operations for safeguarding the interests of the farmers.
  • Distribution of food grains throughout the country for the public distribution system.
  • Maintaining a satisfactory level of operational and buffer stocks of food grains to ensure National Food Security.

In the previous blog, we discussed FCI policies & systems on Industrial Relations-Labour, its Integrated Information System for Foodgrains Management (IISFM), the structure of the vigilance department, and more.                

Storage & Contract


  • The storage function assumes paramount importance in an organization such as the Food Corporation of India because of its requirement to hold a huge inventory of food grains over a significant period of time. 
  • The storage plan of FCI is primarily to meet the storage requirement for holding stocks to meet the requirements of the Public Distribution System and Other Welfare Schemes undertaken by the Government of India.
  •  Also, buffer stock is to be maintained for ensuring the food security of the nation.
  •  Adequate scientific storage is a prerequisite to fulfilling the policy objectives assigned to the Food Corporation of India for which FCI has a network of strategically located storage depots including silos all over India.
  • Besides having its own storage capacity, FCI has hired storage capacities from Central Warehousing Corporation, State Warehousing Corporations, State Agencies and Private Parties for the short term as well as for a guaranteed period under the Private Entrepreneurs Guarantee Scheme.
  • New Godowns are being constructed by FCI mainly through Private Participation under the Private Entrepreneurs Guarantee Scheme.
  • FCI is also augmenting and modernizing its storage capacity in the form of silos through Public-Private Partnership.
  • Storage Capacity for Central Pool Stocks for the last ten years as of 1st April is given as under:

Finance and Accounts

  1. Providing financial concurrence of different proposals of operating divisions after analyzing different financial aspects such as compliance of provisions of GFR and FCI Circulars/Guidelines, compliance of different manuals of FCI etc.
  2. Digital payment to all staff and third parties is being done through the Cash Management Product facility of SBI to achieve the endeavour of Digital India of the Government.
  3. Confirmation/Verification of genuineness of Bank Guarantee issued in favour of FCI is being done through the Structured Financial Messaging System (SFMS) which mitigate the risk of fraud.
  4. Issue the instructions/clarifications of Tax matters to field offices across All India to achieve the compliance of tax laws i.e. GST and Income Tax.
  5. Implementation of Bill Tracking software (BTS) which helps in real-time tracking of supplier/contractors bills and ensures timely payment to them. Also, the suppliers can keep a watch on their bills and can check the status of their payments.
  6. Onboarding on Trade Receivables Discounting System (TReDS) for discounting of bills of MSME vendors.


  • FCI is fully owned by the Government of India. It’s Authorized Capital is Rs.10,000 crore. 
  • Being a trading corporation major capital infusion relates to the perpetual holding of stocks. 
  • The details of authorized and paid-up equity capital (as of 31.01.2021) since 2001-02 are as follows;


  • FCI at present exclusively engaged in the implementation of the food policy of GoI.
  •  In the process of its operation, FCI has to carry food stocks a major part of which are carried perpetually as a part of the operation and buffer stock. 
  • To fund these stocks and also to fund arrear subsidy, FCI borrows funds from different sources.

Cash Credit Limit

  • The Working Capital requirement of the Food Corporation of India is met from the Cash Credit limit through a Consortium of Banks with State Bank of India as lead Bank. 
  • The CC limit is secured by stock held by FCI and also guaranteed by the Government of India. 
  • The CC limit as of 31.01.2021 stood at Rs.9,495 crore. 
  • The rate of interest applicable on Cash Credit Account was 7.78% p.a. (w.e.f. 01.10.2020) which was reduced to 7.74% w.e.f. 01.01.2021.


  • The working capital requirement of FCI which consists of the value of stock held and arrear subsidy due from GoI has increased substantially over years without any corresponding increase in paid-up capital.
  • Thus the Government of India has permitted FCI to mobilize funds by issuing government-guaranteed bonds from time to time.


  • The NSSF Loans are sanctioned to FCI every year since the year 2016-17 in lieu of food subsidy and are off-balance-sheet expenditure of the Government.
  •  These loans are for a period of 5 years and to be repaid on equal annual instalments.

WMA :1

  • To provide temporary working capital to the Corporation, the Government of India releases WMA to FCI. 
  • These advances are released during the year and repayable/recovered out of the subsidy allocation/NSSF Allocation for the year towards the end of the financial year. 
  • The interest rate of this loan is at par with 364 days T Bills.

Short Term loan

  • FCI takes short term loans to meet out cash flow mismatches and to provide temporary working capital to the Corporation. 
  • The corporation avails unsecured short term loans (STL) from scheduled commercial banks through the E-procure portal. 
  • At present the Sanctioned limit is Rs. 75,000 crores.

The topic covered in the blog pertains to UPSC papers on GS 3 Agriculture and Essay type questions. Don’t forget to subscribe so that you never miss out on such important and interesting topics. Check out our previous blogs on various topics here.

Blog Post written by:
Anurag Trivedi
UPSC Mentor