Paddy procurement: CAG flags irregularities of over Rs 50k cr

Flagging major lapses, CAG today alleged irregularities to the tune of over Rs 50,000 crore in procurement and milling of paddy meant for distribution of rice to poor through ration shops at subsidised rates.
Lapses that have been pointed out in the CAG report tabled in Parliament today, include undue benefits to the rice millers and discrepancies in payment of nearly Rs 18,000 crore as support price to paddy farmers without authentication.
"These deficiencies also contributed to avoidable increase in food subsidy expenditure of the government of India," CAG said about its audit conducted for the period between April 2009 and March 2014.

CAG listed as many as nine major cases of irregularities, all of which put together add up to Rs 40,564.14 crore. There were also a number of smaller cases amounting to the irregularities of over Rs 10,000 crore -- taking the total amount to well above Rs 50,000 crore.
Besides, the official auditor also flagged that it was not clear as to how Chhatishgarh government ensured the minimum quality standards for paddy worth Rs 21,115.13 crore procured during the audit period without necessary checks.
The audit involved scrutiny of records of the central government agency FCI (Food Corporation of India), as also that of state governments and their agencies in Chhattisgarh, UP, Bihar, Haryana, Punjab, Odisha, Andhra Pradesh/Telangana.

The Comptroller and Auditor General of India (CAG) suggested revisiting the existing procurement and milling plans and suggested the government should transfer minimum support price to accounts of farmers directly.

CAG said Rs 3,743 crore worth of benefit was passed on to millers by not including the value of by-products in the price they have to pay for milling paddy, a charge the government refuted saying the rate paid includes value of by-products like rice husks and rice brans.
The government said a Traffic Commission has been asked to study the milling cost and value of by-products and suggest a new rate by December, based on which the government will be deciding on revising the milling charges that have not been revised since 2005.

"Delay in revising the milling charges and poor control over custody of paddy/rice resulted in not only undue gains to the rice millers but also widespread and large scale non- delivery of paddy and rice by them," CAG said in the report titled 'Procurement and Milling of Paddy for the Central Pool'.