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Cabinet approves the exclusion of States from National Small Savings Fund
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The Union Cabinet has excluded States and Union Territories except Arunachal Pradesh, Kerala, Delhi (UT) and Madhya Pradesh from National Small Savings Fund (NSSF) investments with effect from 1 April 2016 The cabinet meeting chaired by Prime Minister Narendra Modi also approved one-time loan of Rs. 45000 crore from NSSF to Food Corporation of India (FCI) to meet its food subsidy requirements.
KeyFacts
Arunachal Pradesh will be given loans to the tune of 100% of NSSF collections within its territory, while Kerala, Madhya Pradesh and Delhi (UT) will be provided with 50% of collections. Through the budget line of Department of Food and Public Distribution, the servicing of interest and principal of debt will be extended to Food Corporation of India (FCI). The repayment obligation of the FCI in respect of NSSF Loans will be treated as the first charge on the food subsidy released to the FCI. In addition, FCI will be required to reduce the amount of its current Cash Credit Limit with the banking consortium to the extent of the NSSF loan amount. An legally binding agreement will be signed between Department of Food, FCI and NSSF on the modalities for repayment of interest rate and the restructuring of FCI debt will be made possible within 2-5 years. In the future, NSSF will invest on items whose expenditure is ultimately borne by Union Government and Union budget will meet requirement of the repayment of the principal and interest of that amount.
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