FCI helps Punjab avoid crisis by increasing wheat stocks | India News
In Punjab, farmers sell their food grains to five state purchasing agencies (ASPs) 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 take further advances from banks to prepay farmers. It could have led to a dire situation, ”a source said.
In a letter to Punjabic Chief Minister Amarinder Singh, Food Minister Piyush Goyal mentioned that the state government in February urged the Food Ministry and the CFI to evacuate 22.42 million people. tonnes of wheat stock held by government agencies. Goyal had assured that all the stock would be evacuated to avoid any crisis.