NEW DELHI: The government may have finally cleared the whopping Rs 16,200 crore it owed in food grain buys by the rural development ministry to the Food Corporation of India (FCI) by issuing bonds.
The revised estimate for food subsidy bill alone in 2007-08 is pegged at Rs 30,000-crore odd. But owings to the FCI have not been accounted for traditionally under this head. In effect, although dues to from a government ministry other than Food to the FCI are government spends, they were however not been accounted for under any Budget head but nonetheless have, the potential to impact on fiscal deficit.
The RD ministry still owes the food grain procurement major Rs 10,700 crore. The finance ministry had assured the food ministry that these dues would be settled, too, but failed to spell out a timetable or even the method of settlement: bonds or cash.
A good chunk of the already pending dues to the food grain major from the rural development ministry as well as other departments, totalling a huge Rs 16,200 crore, was settled earlier by the finance ministry through issue of bonds. The bonds were issued in three tranches: the first two tranches in end 2006 totalled Rs 10,000 crore; a third tranche was released in mid-February 2007 for Rs 6,200 crore. They bore a coupon rate of 8.03% to 8.23%.
No bonds were issued to the FCI in the current year, 2007-08. Instead, the RD ministry paid up Rs 950 crore from its budgetary allocation for the year, towards settling dues for welfare programmes run by it that used food grains extensively.
Meanwhile, however, the RD ministry ran up more bills totalling Rs 10,000 crore. In addition, interest on pending dues kept piling up to total a stifling Rs 700 crore plus. “Rs 10,000 crore plus was pending on the principal amount owed to us by the RD ministry alone. The rest of the dues are purely built up interest on the principal,” sources pointed out.
There’s a silver lining to the annual intra government food spend from now on, though. From 2008-09, the SGRY (the special component under the Sampoorna Grameen Rozgaar Yojana) is expected to be wound up to make way for the countrywide implementation of the National Rural Employment Guarantee Programme (NREGP). That would bring the food grain dues from RD down substantially, all the more since the payment by food grain option under the NREGP was removed.
Some indications that dues pending under this head will go down noticeably was already there this year. Food grain bills run up by the SGRY totalled a marked Rs 3,000 crore in2003-04. In 2007-08, though, those dues went down to only Rs 1200 crore.
The revised estimate for food subsidy bill alone in 2007-08 is pegged at Rs 30,000-crore odd. But owings to the FCI have not been accounted for traditionally under this head. In effect, although dues to from a government ministry other than Food to the FCI are government spends, they were however not been accounted for under any Budget head but nonetheless have, the potential to impact on fiscal deficit.
The RD ministry still owes the food grain procurement major Rs 10,700 crore. The finance ministry had assured the food ministry that these dues would be settled, too, but failed to spell out a timetable or even the method of settlement: bonds or cash.
A good chunk of the already pending dues to the food grain major from the rural development ministry as well as other departments, totalling a huge Rs 16,200 crore, was settled earlier by the finance ministry through issue of bonds. The bonds were issued in three tranches: the first two tranches in end 2006 totalled Rs 10,000 crore; a third tranche was released in mid-February 2007 for Rs 6,200 crore. They bore a coupon rate of 8.03% to 8.23%.
No bonds were issued to the FCI in the current year, 2007-08. Instead, the RD ministry paid up Rs 950 crore from its budgetary allocation for the year, towards settling dues for welfare programmes run by it that used food grains extensively.
Meanwhile, however, the RD ministry ran up more bills totalling Rs 10,000 crore. In addition, interest on pending dues kept piling up to total a stifling Rs 700 crore plus. “Rs 10,000 crore plus was pending on the principal amount owed to us by the RD ministry alone. The rest of the dues are purely built up interest on the principal,” sources pointed out.
There’s a silver lining to the annual intra government food spend from now on, though. From 2008-09, the SGRY (the special component under the Sampoorna Grameen Rozgaar Yojana) is expected to be wound up to make way for the countrywide implementation of the National Rural Employment Guarantee Programme (NREGP). That would bring the food grain dues from RD down substantially, all the more since the payment by food grain option under the NREGP was removed.
Some indications that dues pending under this head will go down noticeably was already there this year. Food grain bills run up by the SGRY totalled a marked Rs 3,000 crore in2003-04. In 2007-08, though, those dues went down to only Rs 1200 crore.
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