Tamil Nadu Civil Supplies Corporation’s fiscal risk differs from other PSUs: White Paper
The fiscal risk of the Tamil Nadu Civil Supplies Corporation (TNCSC) represents a different character from that of other State Public Sector Undertakings, such as
The fiscal risk of the Tamil Nadu Civil Supplies Corporation (TNCSC) represents a different character from that of other State Public Sector Undertakings, such as power utilities and transport corporations, according to the recently released White Paper on the Fiscal Management in Tamil Nadu. “It is not a risk of commercial failure but of subsidy inadequacy, reimbursement delay, and the compounding costs of deferred obligation,” the document stated, pointing out that the Corporation “is not a loss-making enterprise in the conventional sense.” Regarded as the “operational backbone” of the State’s public distribution system, the Corporation procures paddy and other commodities from farmers; processes and stores them; and distributes food grains, sugar, pulses, and edible oil through fair price shops to ration card holders across the State.
Apart from being the Union government’s nodal agency for paddy and ragi procurement, the TNCSC implements special welfare schemes, including the distribution of free rice, Pongal gift kits, and disaster relief. It receives subsidy inflows from the Government of India and the Tamil Nadu government, while the payments relate to procurement, distribution, and debt servicing obligations. The White Paper has identified three characteristics of the entity’s financial metrics. In only one (2022-23) of the past five years had the TNCSC recorded a cash surplus.
That surplus was due to the timing of subsidy receipts that had been delayed from the prior year, when Pongal kits and COVID relief distributions had inflated payments. The deficit trajectory “is worsening sharply.” After narrowing to ₹1,166 crore in 2024-25, the deficit rose to ₹5,245 crore in 2025-26 — nearly reverting to the levels seen in the pandemic-affected years of 2020-21 and 2021-22. The 55% increase in working capital debt in the past five years had also led to the rise in interest payment, which “now consumes a significant and rising share of the TNCSC’s annual payments — a cost that is entirely unproductive,” the White Paper observed.
“It [the cost] funds neither procurement nor distribution but simply the servicing of previously accumulated deficit financing.”
The BriefWire