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Cabinet approves the exclusion of States from National Small Savings Fund

The Union Cabinet has excluded States and Union Territories except Arunachal Pradesh, Kerala, Delhi (UT) and Madhya Pradesh from National Small Savings Fund (NSSF) investments with effect from 1 April 2016

The cabinet meeting chaired by Prime Minister Narendra Modi also approved one-time loan of Rs. 45000 crore from NSSF to Food Corporation of India (FCI) to meet its food subsidy requirements.

Key Facts
  • Arunachal Pradesh will be given loans to the tune of 100% of NSSF collections within its territory, while Kerala, Madhya Pradesh and Delhi (UT) will be provided with 50% of collections.
  • Through the budget line of Department of Food and Public Distribution, the servicing of interest and principal of debt will be extended to Food Corporation of India (FCI).
  • The repayment obligation of the FCI in respect of NSSF Loans will be treated as the first charge on the food subsidy released to the FCI.
  • In addition, FCI will be required to reduce the amount of its current Cash Credit Limit with the banking consortium to the extent of the NSSF loan amount.
  • An legally binding agreement will be signed between Department of Food, FCI and NSSF on the modalities for repayment of interest rate and the restructuring of FCI debt will be made possible within 2-5 years.
  • In the future, NSSF will invest on items whose expenditure is ultimately borne by Union Government and Union budget will meet requirement of the repayment of the principal and interest of that amount.

The 14th Finance Commission (FFC) had recommended that the State Governments should be excluded from the investment operations of the NSSF. The main reason given was that NSSF loans come at an extra cost to the State Governments compared to the market rates which are considerably lower. Following this, Union Cabinet in February 2015 held that this recommendation will be examined in due course in consultation with various stake holders. Later, all states except Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh expressed their desire to be excluded from NSSF investments.

About National Small Savings Fund (NSSF)

  • NSSF was set up on 1 April, 1999 with an objective to account all the monetary transactions under small savings schemes of the Union Government under one umbrella. It was set up in the Public Account of India.
  • The net accretions under the small savings schemes are invested in the special securities of various States/ Union Territories (with legislature)/Central Governments.
  • States not only can borrow from this account but have the obligation to borrow. The minimum obligation of States to borrow from the NSSF has been brought down from 100% to 80% of net collections from 2007.


Union Government launches FCI’s Depot Online System

Union Government has launched Depot Online System of state run Food Corporation of India (FCI) to bring transparency and minimise storage losses of foodgrains.

It was launched by Union Food and public Distribution Minister Ram Vilas Paswan in New Delhi as part of Digital India initiative of Union Government.

Key facts

  • Depot Online System will help real time monitoring of FCI operations and enhance transparency and efficiency.
  • The project is being implemented in the FCI owned 553 depots and subsequently FCI hired godowns will be also brought under the ambit of the project later.
  • The system will bring automation of the entire process from entry and exit of foodgrains at FCI depots.
  • It would eliminate usage of manual registers and would help in better monitoring and supervision as would reduce leakages and losses.


CCEA approves measures to increase Pulses’ production

The Cabinet Committee on Economic Affairs (CCEA) has approved creation of buffer stock of pulses to deal with wide fluctuation in prices of pulses and check food inflation.

The buffer stock will be created by the procurement and would be valid for fiscal year 2015-16.

As per decision

  • The buffer stock will consist about 50000 tonnes of pulses from the kharif crop 2015-16 and one lakh tonnes from the rabi crop of 2015-16.
  • The Procurement will be done at market prices through above Minimum Support Price (MSP) out of the Price Stabilisation Fund.
  • If the prices fall below MSP, the procurement will be made at MSP under Price Support Scheme of Department of Agriculture (DoA).
  • Procuring agencies would be Food Corporation of India (FCI), National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) and Small Farmers’ Agribusiness Consortium (SFAC).

The CCEA also decided to import pulses through Union Ministry of Commerce depending on the requirement.


  • Though being the highest producer of pulses in the world, India faces shortage as its domestic demand outstrips domestic production.
  • It leads to fluctuation in prices and food inflation. As a short term measure the shortfall of pulses is usually met from imports.
  • However, there is need for a long-term solution to meet its demand and increase pulses production in the country.
  • Presently, Union government promotes cultivation of pulses mainly through National Food Security Mission (NFSM) which covers 622 districts in 27 states.
  • Around 50 per cent of allocation of NFSM is made for pulses. Under it, financial assistance is given for distribution of quality seeds of new varieties, integrated pest management, water saving devices, demonstration of improved technology and capacity building of farmers.