Centre resorts to loan to avoid fiscal slippage
The Food Corporation of India (FCI) has taken a loan of Rs.600 billion from the National Small Savings Fund (NSSF), as per a report in Financial Express. The government has resorted to the NSSF loan for the third year in a row to ensure that the FCI’s operations are unaffected owing to its funds constraints. Such arrangements also indicate that normal government expenditure is being substituted with loans instead of cash on fears that fiscal deficit will go for a toss if it is shown as the government borrowing, as per industry sources. The budgeted food subsidy through FCI for 2018-19 was Rs.1.4 trillion. Of which, the Centre has paid about Rs.800 billion from the Budget. With the latest loan, the outstanding debt of FCI (from the NSSF) is estimated to have touched Rs.1.8 trillion. The Centre’s dues to the FCI has now touched Rs.1.9 trillion and unless it finds budgetary resources soon to salvage the situation, it could be looking at a debt trap, but don’t worry like always the can will be kicked into the future .