Cabinet meet today: Top 3 decisions Modi government took; all you need to know

Modi Cabinet met on Wednesday and took some critical decisions. Cabinet has approved three major decisions. First was the proposal to increase the authorized capital of state-owned Food Corporation of India (FCI to Rs 10,000 crore from the existing Rs 3,500 crore. Another approval was the extension of norms for mandatory packaging in jute materials, which will benefit farmers and workers located in the Eastern and North-Eastern regions of the country. The third was the extension of the term and coverage of the Fifteenth Finance Commission, which will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities.

Here is a detailed analysis of all the decisions by Union Cabinet today.

1. Increase in the authorized capital of FCI from Rs. 3,500 crore to Rs 10,000 crore

The Cabinet has approved increase in the authorized capital of Food Corporation of India (FCI) from existing Rs 3,500 crore to Rs 10,000 crore. With the increase in authorized capital, additional equity capital can be infused in FCI through Union Budget, to fund the foodgrains stock, perpetually held by FCI. This will reduce the borrowings of FCI, save interest cost and reduce food subsidy in consequence.

The operations of Food Corporation of India require maintaining perpetual stock of foodgrains which needs to be funded by the Government through equity or long term loan. The Government is providing equity to FCI for maintaining stocks. The present authorized equity capital of FCI is Rs 3,500 crore and paid-up equity capital is Rs 3,447.58 crore.

Food Corporation of India was constituted under the Food Corporations Act, 1964, to implement the food policy of the Government of India. Its primary objective is to ensure Minimum Support Price to farmers, maintain a buffer stock of food grains and distribution of foodgrains.

2. Extension of norms for mandatory packaging in jute materials

The Cabinet has accorded its approval for mandatory packaging of foodgrains and sugar in jute material for the Jute Year 2019-20. The Government has retained the scope of mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987 as per last year. The decision of the Cabinet mandates that 100% of the food grains and 20% of the sugar shall be mandatorily packed in diversified jute bags.

The decision to pack sugar in diversified jute bags will give an impetus to the diversification of the jute industry. Further, the decision also mandates that initially 10% of the indents of jute bags for packing foodgrains would be placed through a reverse auction on the GeM portal. This will gradually usher in a regime of price discovery.

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The approval will benefit farmers and workers located in the Eastern and North-Eastern regions of the country particularly in the states of West Bengal, Bihar, Odisha, Assam, Andhra Pradesh, Meghalaya, and Tripura.

3. Extension of the term and coverage of the Fifteenth Finance Commission

The Union Cabinet approved the Fifteenth Finance Commission to submit the first report for the first fiscal year viz. 2020-21 and to extend the tenure of XV-FC to provide for the presentation of the final report covering FYs 2021-22 to 2025-26 by 30th October 2020. The extension of the term will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities to finalize its recommendations for the period 2020-2026.