The GoI spends huge amount of money for supply of rice under TPDS (Targeted Public Distribution Scheme) which as on 31 Mar 2014 stood at Rs. 89,740 crore. During the periods from 2009-10 to 2013-14, for regions audited by the CAG (sample basis) discrepancies to the tune of Rs. 48,106 cr., while there were multiple doubts on the overall quality management, procurement, storage and processing infrastructure under the Central Pool.
Structure
1. Food Corporation of India monitored by the Central Government
2. CAG’s audit of FCI / State Governments
3. Paddy Procurement system in India
4. Key terms
5. Scam / Frauds / Wasteful Expenditures observed by CAG
FOOD CORPORATION OF INDIA
The Food Corporation of India (FCI) was incorporated under the Food Corporation Act, 1964 with the objective to undertake purchase, storage, movement, transportation, distribution and sale of food grains on behalf of the Government of India (GoI). FCI, in coordination with the Ministry of Consumer Affairs, Food and Public Distribution, Department of Food and Public Distribution at Central level and State Governments Agencies (SGAs) at State level carries out the procurement operations of paddy/rice as an integral part of the food grains management operations. The main objective of procurement of paddy is to make rice (after milling of paddy) available at lower rate to the consumers {including Targeted Public Distribution System (TPDS) beneficiaries} on one hand and to provide Minimum Support Price (MSP) to the farmers.
OVERVIEW OF CAG AUDIT AND COVERAGE
Accordingly, CAG took up the performance audit of the FCI/State Governments and their agencies to assess the performance of procurement and milling of paddy procured for the Central Pool and delivery of rice to FCI/SGAs. The Performance Audit Report points out a large number of deficiencies/weaknesses in the conceptual and operational framework of the procurement and milling of paddy by FCI/SGAs in the country. An Entry Conference (16 May 2014) was held with the Ministry/FCI Management wherein the scope, objective and methodology of audit were discussed and the audit criteria were agreed upon. Field audit was conducted during May 2014 to December 2014 in case of non DCP States11 and September 2014 to January 2015 in case of DCP States.
Accordingly, the CAG carried out performance audits at the following states:
1. Andhra Pradesh
2. Bihar
3. Odisha
4. Punjab
5. Telangana, and
6. Uttar Pradesh
OPERATIONAL FRAMEWORK OF PADDY PROCUREMENT & RICE MILLING & KEY COMPONENTS
The Government has built up an administrative mechanism for implementation of the Food Management Policy. The Ministry of Agriculture and the Ministry of Consumer Affairs, Food and Public Distribution formulates and implements the Food Management Policy of the Government of India. The Ministry of Agriculture is responsible for formulation of national policies and programmes relating to prices of agricultural products. The formulation and implementation of national policies relating to procurement, management, storage and distribution of food grains, TPDS, maintaining of buffer stock, export and import, quality control and specifications of food grains, administration of subsidies on food grains etc. are handled by the Ministry.
The following charts details the entire paddy procurement and rice milling procedure.
Key Components Of Procurement Policy
KEY OBSERVATIONS BASED ON THE AUDIT
We have segregated the CAG observations in 2 main categories:
1. Losses / Wasteful expenditures
2. Absence or no quality controls in operational areas
Losses or Wasteful Expenditures
The following table summarizes the wasteful losses incurred by FCI, SGA, etc., during the period of Audit. There are other losses
Operational Inefficiencies
Issues with quality control:
1. Of the total 5 tests (i.e. 1. Foreign matter, 2. Damaged discoloured, sprouted and weevilled grains, 3. Immature, shrunken and shriveled grains, 4. Admixture of lower class and 5. Moisture content); only Moisture content was checked for all the Paddy procured by Chhattisgarh State Government. Moreover no quality norms or sample / batch check norms were made by the Government to ensure quality products are procured. Accordingly, there is no clarity on the entire 191.35 Lakh MT of paddy worth Rs. 21,115.3 procured is of right quality.
2. In 16 districts of Punjab four procurement agencies, only 1,336 officials were deputed for 2,390 mandis during the KMS 2009-10 to 2013-14 which was less than even one person per mandi.
3. As far as procurement by FCI is concerned, it was noticed in four districts each (Ludhiana, Sangrur, Moga and Patiala) of Punjab and (Fatehabad, Karnal, Kaithal and Kurukshetra) Haryana regions of FCI, 6.4470 LMT of paddy valuing Rs. 720.85 crore was purchased by FCI during Kharif Seasons of 2009-10 to 2013-14. Out of this, samples of 0.13 LMT were sent to district laboratory in case of only the Punjab region. No sample was sent to laboratory in case of Haryana region.
4. In Uttar Pradesh, the prescribed norm for manpower deployment for purchase of paddy was three officials in each purchase center for ensuring the quality of paddy. However, prescribed number of staff was not deployed in 617 purchase centers (80 per cent) out of 768 purchase centers. There was an overall shortage of 60 per cent (925 officials were deployed against norms of 2,304).
Improper selection of rice millers during 2009-10 To 2011-12
1. Audit observed a number of deficiencies in records pertaining to millers in Odisha, Andhra Pradesh, Telangana and FCI Bihar region, some of which are as follows:
2. Physical verification of 151 premises of millers was not conducted before the selection of millers;
3. Permanent Account Number was not available in 81 cases while in 89 cases Taxpayer Identification Number was not available;
4. Land documents were not collected from 85 millers;
5. The validity of the certificate issued for boilers had expired long back in 37 cases; and
6. There was no certificate regarding running status of the 22 mills granted by the District Task Force (DTF), current electricity bill and Income Tax Return during the year 2009-10 to 2011-12.
The above irregularities point to a huge issues(scam) in overall paddy procurement, rice processing, quality standards in all aspects and raises a question as to how the government deals with or UPA 2 has dealt with Food security for the public and how far effective has the Public Distribution System come off so many years since independence.
The above issues point to such serious lapses in financials and quality areas that I am stunned to understand what kind of FOOD is supplied under the PDS / TPDS. Hopefully, the NDA government on central level does things to change the way PDS and Procurement is done.
Frankly, after reading the detailed report I am so outraged, its difficult to Pin things down. And, what I fail to understand is why the NDA Government not taking fast measures to curb these inefficiencies, which will lead to substantial savings and reduce tax burden on commoners.
Source: Report of the Comptroller and Auditor General of India on Procurement and Milling of Paddy for the Central Pool; Report No. 31 of 2015 of the ‘Union Government Ministry of Consumer Affairs, Food and Public Distribution’