Categories: Business

Higher off take by FCI due to covid 19 scheme can boost procurement agencies liquidity


FCI Procurement

new Delhi. The operating cash flow (CFO) of the States procurement agencies (SPA) is expected to improve in the current financial year due to the Food Corporation of India (FCI) raising more food grains for welfare schemes linked to the Kovid-19 crisis. Rating agency India Ratings & Research released a report in this regard on Friday. The report states that various welfare schemes announced by the government are being run through FCI. For this, it has lifted more food grains than SPA and due to this, the unsold food grains and liabilities of SPA have reduced.

In the wake of the Kovid-19 epidemic and the lockdown implemented for its prevention, the government has announced various welfare schemes to alleviate the problems of the poor. One of these is the Pradhan Mantri Garib Kalyan Anna Yojana. Under this, five kilograms of food grains and one kilogram of pulses were to be distributed free of cost in the first three months to 80 crore beneficiaries under the National Food Security Act, which has now been extended till the end of November. According to the report, due to all such welfare schemes, FCI godowns will be empty, so that it can prepare to keep new products coming from different SPA.

SPA procures wheat and paddy from designated mandis and supplies these food grains to FCI to contribute to the central pool. For the past few years, the stock of food grains managed by FCI has been much higher than the prescribed norm. FCI had a stock of rice and wheat at 31.2 million tonnes and 24.4 million tonnes respectively on 1 April. This is 1.36 million tonnes and 7.5 million tonnes respectively more than the prescribed storage norms. The rating agency said that due to the substantial increase in the stock of the central pool, SPA's cash position has been negatively impacted. According to the report, SPA's operating profit position could be positive despite the expectation of record crops in both wheat and rice in the year 2020-21.

This post was published on July 11, 2020 2:19 am

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