The government on Wednesday approved an infusion of Rs 10,700 crore as equity in state-owned FCI for working capital requirement this fiscal.

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The Food Corporation of India (FCI) is the government's nodal agency for procurement and distribution of foodgrains.

"The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved infusion of equity of Rs 10,700 crore for working capital in financial year 2024-25 in Food Corporation of India (FCI)," an official statement said.

The decision is aimed at bolstering the agricultural sector and ensuring the welfare of farmers nationwide.

"This strategic move shows the government's steadfast commitment to supporting farmers and fortifying India's agrarian economy," it added.

The FCI started its journey in 1964 with authorised capital of Rs 100 crore and equity of Rs 4 crore.

The operations of FCI increased manifolds resulting in increase of authorised capital from Rs 11,000 crore to Rs 21,000 crore in February 2023.

The equity of FCI was Rs 4,496 crore in 2019-20 fiscal, which was increased to Rs 10,157 crore in 2023-24.

"Now, the Government of India has approved a significant amount of equity of Rs 10,700 crore for FCI which will strengthen it financially and will give a big boost to the initiatives taken for its transformation," the statement said.

FCI plays a pivotal role in ensuring food security by procurement of foodgrains at Minimum Support Price (MSP), maintenance of strategic foodgrain stocks, distribution of foodgrains for welfare measures and stabilisation of foodgrain prices in the market.

"The infusion of Equity is a significant step towards enhancing the operational capabilities of FCI in fulfilling its mandate effectively. FCI resorts to short-term borrowings to match the gap of fund requirement. This infusion will help to lower the interest burden and will ultimately reduce the subsidy of the Government of India," the statement said.

The government's dual commitment to MSP-based procurement and investment in FCI's operational capabilities signifies a collaborative effort towards empowering farmers, fortifying the agricultural sector, and ensuring food security for the nation, it added.