NEW DELHI: The Comptroller and Auditor General (CAG) has asserted that the state-run Food Corporation of India (FCI) would have saved the interest burden of Rs. 35,701.81 crore during the term of 2011-16, had the government released food subsidy on time.
The CAG also suggested that full allocation be made to the agency and advised the FCI to approach a consortium through the Ministry of Food for allowing it to utilise short-term loan without wasting the cash credit limit.
The CAG in the latest report presented before the Parliament also stated that the FCI should get permission again to obtain guarantee for issue of bonds as it will help it to gain cheaper source of funds.
"On an average, only 67 per cent of subsidy claimed was released by the Government of India over the last five years because of which FCI had to borrow from other costlier means of finance resulting in heavy interest burden of Rs. 35,701.81 crore during 2011-16," the CAG said in the report.
The FCI had claimed a subsidy of Rs. 4,45,809.59 crore during 2011-16 and as per reports, it received only Rs. 3,00,675.88 crore from the ministry.
"Had the government paid the full amount of subsidy within the same financial year, there would not have been any need to take money from market sources and thus, additional interest could have been saved. This is a completely avoidable payment of interest," Principal Director and Auditor of CAG Ashutosh Sharma told reporters here.
Sharma said that the last year's situation was better than previous year as the reimbursement during last year was slightly better.
He said less subsidy is released by the finance ministry releases towards subsidy as they have competing priorities and added that the food subsidy would have been less if government had given money in time to FCI rather than paying interest on market loans.
As per the report of the CAG, due to restrictions imposed by consortium of banks for utilising short term loans and lack of permission by the government to raise bonds, the FCI had to resort to costlier source of financing.