Food Corporation of India (FCI)

How it came to be

• The 1943 Bengal famine killed millions and exposed India’s lack of any real grain-management system.
• The Foodgrains Policy Committee, 1957, first recommended a dedicated central procurement agency.
• The FCI was established on 14 January 1965, under the Food Corporations Act, 1964.

Status and structure

• It is a statutory public sector undertaking under the Ministry of Consumer Affairs, Food and Public Distribution.
• Its headquarters was originally in Chennai. It later shifted to New Delhi.
• It works through five zonal offices, each reporting up to a Chairman-cum-Managing Director.

Three statutory objectives

• Price support: it procures wheat, rice and coarse grains directly from farmers at Minimum Support Price.
• PDS supply: it supplies grain to the Public Distribution System for release through ration shops.
• Buffer stocking: it holds reserves against shortages.
• See Support Pricing System and MSP Mechanics and Public Distribution System and Food Security.

NFSA and the Shanta Kumar review

• The FCI implements the National Food Security Act, 2013, India’s legal food-entitlement law.
• A High-Level Committee under Shanta Kumar was set up in August 2014 to review the FCI.
• It submitted its report in January 2015.
• It suggested letting private players procure and store grain, ending State MSP bonuses, and shifting toward cash transfers.
• The overall thrust was to narrow the FCI’s direct role over time.

Economic cost

• Economic cost = MSP plus any bonus, plus procurement incidentals, plus distribution cost.
• Procurement incidentals include mandi tax, labour and gunny bags.
• Distribution cost includes freight, storage, handling and transit losses.

Capacity today

• FCI storage capacity crossed 482 lakh tonnes as of November 2025.
• More than 2,500 FCI godowns were operational as of December 2025.
• By April 2026, central pool stocks reached 604 lakh tonnes, well above the buffer norm.
• See Buffer Stock and Food Grain Management.

How the FCI builds storage

• Not all FCI godowns are government-built. Many are hired from private owners.
• The Private Entrepreneurs Guarantee (PEG) Scheme, started in 2008, lets private parties build storage for guaranteed FCI hiring.
• Private entrepreneurs, the Central Warehousing Corporation and State agencies can all build under it.
• FCI guarantees hiring for 10 years for private builders and 9 years for public sector agencies.
• This lets the FCI expand storage fast without funding construction itself.

The debate

• The FCI was founded to solve scarcity, when India could not feed itself.
• Critics now say it holds far more stock than needed, at high fiscal cost.

The most contested proposal

• Shanta Kumar’s most contested recommendation was to cut NFSA coverage from 67% to 40% of the population.
• In exchange, it proposed raising the entitlement from 5 kg to 7 kg per person a month.

A genuine tension

• MSP procurement guarantees farmers a price floor for wheat and rice.
• But it also reduces the incentive to move away from these two water-heavy crops.

Why the government doubled FCI’s capital

• In February 2024, the government doubled the FCI’s authorised capital from ₹10,000 crore to ₹21,000 crore.
• In November 2024, the Cabinet approved a further ₹10,700 crore equity infusion for FY25.
• The FCI funds most procurement through borrowed money, and the interest adds to its economic cost.
• More equity and less borrowing is meant to ease that burden.

Related

• See One Nation One Ration Card (ONORC) for how PDS beneficiaries use FCI grain across States.
• See Agricultural Produce Market Committee (APMC) Act for the marketing side of the same wheat-and-rice economy.

Recapitalising the FCI

• Authorised capital was doubled to ₹21,000 crore in February 2024.
• A further ₹10,700 crore equity infusion was approved for FY25 in November 2024.
• More equity means less borrowing, which should ease the interest-driven economic cost over time.

Stocks near three times the buffer norm

• As of April 2026, central pool stocks stood at 604 lakh tonnes.
• The mandatory buffer norm for that date was only 210.40 lakh tonnes.
• This is the live version of the surplus-versus-scarcity debate.