CAG Report Cites Irregularities in Procurement System

capacity-building-and-planning-is-critical-to-mgnrega-cag_280713025321The CAG while submitting its report titled ‘Procurement and Milling of Paddy for Central Pool’ in the Parliament today, has alleged that there are grave irregularities in the government procurement and milling of paddy. The report says the rice mill owners take the advantage of skewed pricing policies of the government and make profit accounting to crores.

It is mainly the by-products like bran, husk, nooks and broken rice that the mill owners are marketing illegally from the products procured by the government for Public Distribution System. The CAG estimates a loss of about 10000 crores to the exchequer because of these malpractices, with a cumulative losses accounting for about one lakh crores.

Including this, there are about nine irregularities that the CAG has pointed out, all of which together accounts for 40000 crores.  Though the AG has said that benefits worth Rs 3743 crores has been acquired by the millers, the government refuted it by saying that the procurement costs covered the value of by products also.

The report says “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.”

According to the Central Rice Research Institute(CISR), from 100kg paddy, the millers could get 22kg of husk, 8 kg of rice bran and 2 kg of broken rice. Most of these products are used in making rice bran oils, power generation, pharmaceuticals, cattle feed etc.

“Despite significant increase in realization value of by-products, milling charges have not been revised since 2005. This resulted in excess net realization of Rs 3,743 crore from sale of by-products by millers in Andhra Pradesh, Chhattisgarh, Telangana and Uttar Pradesh during 2009-10 to 2013-14,” CAG cites in the report.

The report also suggests the government to pay the subsidy prices directly to the account of the targeted beneficiaries to avoid the losses.