FCI Current Affairs - 2020

Authorised capital of Food Corporation of India increased to Rs.10000 cr from Rs.3500 cr

Cabinet Committee on Economic Affairs (CCEA) approved increasing authorized capital of Food Corporation of India (FCI) from existing Rs.3,500 crore to Rs.10,000 crore. CCEA was chaired by Prime Minister Narendra Modi.

Key Highlights

FCI’s operations require maintaining perpetual stock of foodgrains which needs to be funded by government of India through equity or via long term loan. Therefore, Centre government is providing equity to FCI for maintaining stocks. As on 31 March 2019, the present authorized equity capital of FCI is Rs.3,500 crore and paid up equity capital is Rs.3447.58 crore.

Significance: With the increase of authorized capital, additional equity capital can be infused in Food Corporation of India (FCI) through Union Budget for funding foodgrains stock, perpetually held by FCI. This will reduce thereby FCI’s borrowings, save FCI’s interest cost as well as reduce food subsidy in consequence.

About Food Corporation of India (FCI)

It was constituted under Food Corporations Act, 1964, to implement the objectives of National Food Policy of Government of India. FCI is a government-owned corporation under Department of Food and Public Distribution of Union Ministry of Consumer Affairs, Food and Public Distribution.

FCI Objectives: to ensure food security of Nation; to ensure Minimum Support Price (MSP) to farmers; to maintain buffer stock of foodgrains; distribution of foodgrains under National Food Security Act (NFSA); and execution of government policies and welfare schemes.

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Centre increases Wheat Import Duty by 40%

With wheat production at record high, government has raised import duty on wheat from existing 30% to 40% to support local farmers interest. The higher duty will help offtake of domestically produced grain by discouraging milers to import wheat but to buy local produce and help protect farm prices. The oversupply in domestic market due to back to back bumper production of food grains has put wheat prices under pressure.

Key Highlights

  • India’s wheat production for 2018-19 crop year (which runs from July to June) is 2% higher than 2018, at a recored production of 99.12 million tonnes.
  • Food Corporation of India (FCI) which holds government’s wheat stocks already had 16.99 million tonnes in April and after next purchase by government its stock could reach 57  million tonnes by May end.
  • Reason for bumper production: In a bid to improve farm income government raised minimum support price (MSP) of wheat (rate at which FCI buys from farmers) by 6% (Rs.1,840 per 100 kg for 2019), which acted as a benchmark for open market in wheat.
  • For similar bumper crop in 2018, government increased import duty on wheat from 20% to 30% which resulted in sharp drop in wheat import.
  • In past India has imported wheat from Australia, Ukraine and Russia, but with global prices in addition to 40% duty would make import virtually impossible.
  • Earlier, in concern of its farm duty rates as well as on subsidies it gives to farmers,
  • In past Australia has taken India to WTO’s arbitration panel on its farm duty rates and subsidies given to farmers, but it hardly affects because India by right can raise duties on wheat up to 80% under a bound rate agreement it has signed at WTO.


Wheat is India’s staple food, placed second to rice. Uttar Pradesh is the largest wheat producing state in India followed by Punjab, Haryana, Madhya Pradesh. India is second largest producer of wheat in the world. China is world’s largest producer, followed by India, Russia, and the United states.

Food Corporation of India

It is a statutory non-profit organization founded and run by Government of India and also run by state Governments. It was created in 1965 under Food Corporations Act 1964, to implement objectives of National Food Policy. Initially headquartered at Chennai it was later shifted to New Delhi. As it is a state-owned enterprise, it has presence in every state in India.

FCI Objectives

  • Safeguarding farmers interests by providing them remunerative prices.
  • Making food grains available at reasonable prices throughout the country (for public distribution system), particularly for vulnerable section of society.
  • Intervening in market for price stabilization.
  • Maintaining buffer stocks as a measure of Food Security.

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