Supply Chain Council of European Union | Scceu.org
Procurement

Paddy procurement: APSCSC likely to go for ₹3000-cr. loan

Andhra Pradesh State Civil Supplies Corporation will have to avail a loan of ₹3,000 crore from the banks to facilitate uninterrupted procurement of paddy from farmers. The loan is to meet the working capital requirements for procurement.

The corporation is negotiating with the National Bank for Agriculture and Rural Development (NABARD) and is likely to be finalised in a couple of days. It is “forced to avail” itself of the cash credit in view of the meagre internal resources.

According to information, the State government has given its nod to raise the loan and negotiate with the banks. The corporation has been asked to ensure that the interest rate is negotiated to the lowest possible level. The corporation has resolved to opt for ₹3,000 crore loan with the government guarantee. The NABARD, in principle, has agreed to sanction the loan. But, there is a hitch. The NABARD is insisting that the corporation should “take the term loan.” The corporation, however, asked the NABARD “to rethink” on its proposal as the term loan will be disadvantageous to the corportion, sources say.

The loan is, usually, repaid as and when the government releases the subsidy component, which is shared by both Central and State governments, on the foodgrains procured and distributed through the Public Distribution System.

The total requirement will be much more if the procurement is as per expectations. The corporation may have to pay more than ₹9,300 crore to the farmers. On an average, the corporation makes payments worth ₹200 crore per day. “Another ₹2,250 crore is required if the procurement crossed 50 lakh metric tons. It takes the total bank loan to ₹5,250 crore,” says a senior official who did not want to be quoted. One of the reasons for borrowing is the delay in the release of the Central government’s share in the procurement process.

In the normal course, the Centre reimburses the expenditure incurred by the government on procurement, storage and distribution of stocks through the totally decentralised procurement process. Also, the corporation has about ₹500 crore to ₹1,000 crore in its kitty right now. “As the corporation has to pay the farmers within 72 hours of procurement and also to keep the momentum of the procurement, it is necessary to borrow the loan,” explains the official.

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