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Home›Commerce›FCI helps Punjab avoid crisis by raising wheat stocks since 2018-19 | India News

FCI helps Punjab avoid crisis by raising wheat stocks since 2018-19 | India News

By Thomas Heikkinen
April 8, 2021
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NEW DELHI: The Central Government Food Corporation of India (FCI) assisted the Punjab The government overcame a crisis that would have affected the wheat supply that was scheduled to start from April 10, lifting 22.42 million tonnes of food grains held by state agencies since 2018-19. The lack of stock clearance would have prevented the government of the Punjab from making advances from banks to pay MSP to farmers for the purchase of fresh produce.
In Punjab, farmers sell their food grains to five public purchasing organizations (SPAs) and they pay the money to the farmers. This amount is later reimbursed by the FCI. To immediately pay the amount to farmers, these state agencies contract advances from a consortium of banks headed by the SBI. In accordance with the rules, this Food Credit advance must be repaid within three years. But the government of Punjab was unable to pay the 2018-19 Rs 89,000 crore loan because the stock had not yet been lifted.
The Punjab uses the Cash Credit Limit (CCL) of a consortium of banks known as the Food Credit Consortium, led by SBI. The CCL is sanctioned for each season separately, based on funds required for the estimated quantity of supply. The Center agrees for such a loan to the state government. These CCLs are guaranteed by stocks of food grains held by public purchasing bodies. The FCI makes payments to SPAs after the food grains have been collected by it.
Due to the non-repayment of the advances contracted by the SPAs, the government of Punjab was faced with the problem of transforming their loan into an NPA on March 31 (Wednesday). “As the RBI had refused to extend the deadline any further, the outstanding amount would become NPA. If this had happened, state agencies would not have been able to receive further advances from banks to prepay farmers. It could have led to a dire situation, ”a source said.
In a letter to the Chief Minister of Punjab Amarinder Singh, Minister of Food Piyush Goyal had mentioned that the state government had urged in February the ministry of food and FCI to evacuate 22.42 million tonnes of wheat stock held by state agencies. Goyal had assured that all the stock would be evacuated to avoid any crisis.

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