Sold out

Published: Wednesday 15 June 2005

Seeds of corruption fill an FC the Comptroller and Auditor General of India (cag) recently unearthed a Rs 2,125 crore scam involving the Food Corporation of India (fci), under the Union ministry of consumer affairs, food and public distribution (mocafpd). cag has charged both fci and the ministry with unduly favouring foodgrain exporters in fixing the price and freight payment, causing a huge loss to the government exchequer during November 2000 to February 2004. A total of 33 million metric tonnes (mmt) of foodgrain was exported during the period.

fci had a humongous grain stock of 40.06 mmt in September 2000 , more than twice the prescribed buffer and beyond its carrying capacity. This apparently became a great opportunity for corrupt officials. Wheat was issued to traders at a price less than even what the below poverty line (bpl) clients are charged in the government's public distribution system (pds). "This is a mockery of the food security system in pro-socialist India," rues Arun Kumar, professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Surprisingly, the issue prices were fixed on the lines of the Expenditure Reforms Commission's (erc's ) guidelines though the Union government had not approved the erc then. Moreover, erc's methodology was meant only for fixing the price for consumers under pds and not for trade.

A group of ministers and mocafpd, which were involved in fixing the prices, also decided that fci would bear the transportation cost from any fci godown of the exporters' choice. As a result, despite sufficient stocks in nearby godowns, foodgrains were transported over long distances; fci spent Rs 516.36 crore in the process. This pared the export prices for both wheat and rice below bpl prices. The wheat price came to Rs 3,562 per metric tonne (mt); bpl price was Rs 4,150 per mt. The rice price came to Rs 4,951 per mt for raw rice and Rs 5,301 per mt for boiled rice; bpl price was Rs 5,650 per mt. fci says the move was part of the export principle and couldn't have been avoided. But a senior cag official alleges "it was clearly a planned attempt to gobble money and might have involved some powerful pressure groups of traders".

fci is also accused of paying Rs 105.2 crore freight charges to exporters based on dubious transportation documents. Another Rs 20.2 crore was lost as exporters were given grains at lower prices even after prices were revised, albeit slightly, during the period.

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