The government has approved a proposal to increase the authorised capital of state-owned Food Corporation of India (FCI) to ₹10,000 crore from the existing ₹3,500 crore. The decision was taken at a meeting of the Cabinet Committee for Economic Affairs (CCEA) on Wednesday.

The hike in authorised capital will help the PSU get additional equity capital through the Union Budget, helping it fund the foodgrain stock held by it. FCI’s current paid-up capital is ₹3,447.58 crore.

The increase in authorised capital and additional matching equity capital from the government will help reduce FCI’s borrowings, save interest costs and reduce food subsidy as a result, an official statement said.

Jute use

In another decision, the CCEA made it mandatory to use jute for packaging foodgrain and sugar in jute year 2019-20. The Jute Packaging Material Act of 1987 mandates the use of diversified jute bags to package all the foodgrain and 20 per cent of sugar in the country. The decision to pack sugar in diversified jute bags will give an impetus to the jute industry, which employs nearly 3.7 lakh workers, the statement said.

“The decision also mandates that initially 10 per cent of the indents of jute bags for packing foodgrains would be placed through reverse auction on the GeM (Government e-Marketplace) portal. This will gradually usher in a regime of price discovery,” the statement said.

Jute is grown in the eastern and north-eastern parts of the country, particularly in West Bengal, Bihar, Odisha, Assam, Meghalaya and Tripura.

 

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