FCI incurred unwanted expenditure of Rs 376 cr between 2006-07 to 2011-12: CAG

Also said 1.06 lakh metric tonnes of foodgrains worth around Rs 121.93 crore was damaged during between the same period

The Food Corporation of India (FCI) had incurred an unwanted expenditure of around Rs 376 crore between 2006-07 and 2011-12 because it failed to utilize the vacant storage space available in Punjab and Haryana after procurement got over, the Comptroller and Auditor General of India (CAG) said today.

The CAG report which was tabled in Parliament today also said that 1.06 lakh metric tonnes of foodgrains worth around Rs 121.93 crore was damaged during between 2006-07 and 2011-12 as FCI did not strictly follow the principle of first-in-first-out for foodgrains, meaning grains procured first should be sold first.

It said the Corporation’s carryover charges paid to the state government’s  rose from Rs 175 crore in 2006-07 to Rs. 1,635 crore in 2011-12 because of holding of food grains beyond the prescribed time frame. CAG also said that an analysis of the storage capacity of FCI revealed serious imbalances with a concentration of capacity in a few states like Punjab, Haryana, Andhra Pradesh, Uttar Pradesh and Chhattisgarh.

“As on 31 March 2012 while Punjab had a storage capacity of 2116 days, Himachal Pradesh, Assam and Jammu and Kashmir had a capacity of 13, 35 and 36 days respectively,” the report said.

On the minimum buffer stock norms, the CAG said it was 'ambiguous' as it did not clearly delineate individual elements of food security  for example  emergency, price stabilization, food security reserve, Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS)] within the minimum buffer stock.

AS per FCI, as on April 1, the country should have a minimum of 21. 2 million tonnes of foodgrains in its warehouses of which 16.2 million tonnes is buffer stocks, while 3 million tonnes for strategic reserve.

CAG said that the average food grains procurement at 514 lakh metric tonnes by FCI, State Government Agencies, states undertaking decentralized procurement between 2006-07 to 2011-12 was lower than the average allocation of 593 lakh metric tonnes made by the Government of India to states for distribution under PDS.

“Procurement at this level would not be able to adequately meet the allocation and the future requirement of food grains estimated by the government,” CAG said.

On the Minimum Support Price (MSP) of wheat and rice, the auditor said that no specific norm was followed for fixing the MSP over the cost of production and also there was wide inter-state variations both in statutory and non-statutory charges levied by the State Governments, which increased the acquisition cost of food grains.

On storage requirement of FCI, the Comptroller and Auditor General of India said that the gap between foodgrains procured and storage space available rose sharply during the period 2006-07 to 2011-12.

It said against the storage gap of 33.2million tonne  as on March 2012(the difference between stocks and storage space), both the government of India and Food Corporation of India envisaged a capacity addition of only 16.3 million tonne during the six year period under various augmentation programmes. Out of this, only 3.4 lakh metric tonne was completed by March 2012.  

The CAG said that it was though grains should be stored in Covered and Plinth (CAP) only during peak procurement season, but it was observed that the quantum of food grains under CAP by FCI and State Government Agencies increased from 6.64 million tonnes in March 2010 to 8.78 million tonnes in March 2012 thereby exposing larger quantity of food grains to the risk of deterioration.