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FCI helps Punjab stave off crisis by lifting wheat stock.

Date: 02-04-2021
Subject: FCI helps Punjab stave off crisis by lifting wheat stock
NEW DELHI: The Food Corporation of India (FCI) under the central government has helped the Punjab government tide over a crisis which would have hit wheat procurement scheduled to start from April 10, by lifting 22.42 million tonnes of the foodgrain held with the state agencies since 2018-19. Failure to clear the stock would have come in the way of the Punjab government to take advance loans from banks to pay the MSP to farmers for the fresh procurment. 

In Punjab, farmers sell their foodgrains to five state procuring agencies (SPAs) and they pay the money to farmers. Later this amount is reimbursed by FCI. To pay the amount to farmers immediately, these state agencies take advance loan from an SBI-led consortium of banks. As per rules, this Food Credit advance has to be repaid within three years. But the Punjab government could not pay the loan of Rs 89,000 crore from 2018-19 as the stock was still to be lifted. 

Punjab avails Cash Credit Limit (CCL) from a consortium of banks which is known as Food Credit Consortium, led by SBI. The CCL is sanctioned for each season separately, depending upon the funds required for estimated procurement quantity. The Centre gives consent for such loan to the state government. These CCLs are secured by the food grains stocks held by the state procuring agencies. FCI makes payments to SPAs after the foodgrains are lifted by it. 

Due to non-repayment of advances taken by SPAs, the Punjab government was facing the problem of their loan becoming NPA on March 31 (Wednesday). “As the RBI had declined to further extend the deadline, the outstanding was going to become NPA. If this had happened, the state agencies would not have been able to take any further advance from banks to pay upfront to farmers. This could have led to a disastrous situation,” said a source. 

In a letter addressed to Punjab Chief Minister Amarrinder Singh, Food Minister Piyush Goyal had mentioned that the state government had in February urged the food ministry and FCI to evacuate 22.42 million tonnes of wheat stock held by the state agencies. Goyal had assured that the total stock would be evacuated to avoid any crisis. 


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