Fearing fund diversion, Centre to audit procurement in Punjab

Ruchika M Khanna

Tribune News Service

Chandigarh, May 23

For the first time, the foodgrain stock procured by Punjab government agencies for the Food Corporation of India (FCI) will be audited by the Centre.

From the ongoing rabi marketing season, the Centre will also be auditing the utilisation of the cash credit limit of Rs 14,500 crore it allowed to Punjab for buying wheat from farmers. The Punjab agencies will have to regularly update the Centre on the exact inventory of foodgrain lying in the state's warehouses and in open storages. Even the movement of grains from Punjab to other states will have to be intimated to the Ministry of Food on a regular basis.

During the paddy procurement season in 2014, Punjab's credit limit to purchase paddy from farmers was not sanctioned till December. The recent move aims at avoiding the repeat of such a situation.

The Centre suspected that a part of that money had been diverted to fund the state's Atta-Dal Scheme. Last October, the Centre had initially refused to sanction the cash credit limit of Rs 23,000 crore for paddy procurement following a dispute over the receivables claimed by Punjab from the Union Ministry of Food. The dispute was over Rs 24,000 crore that Punjab claimed was pending with the Centre for the wheat procured by state agencies on behalf of the FCI since 2002-03. 

The Centre contended that the amount of receivables was much less than what was demanded by Punjab.  

It said there was a mismatch in Punjab's actual foodgrain stocks and the one projected by the state in its account statement given to the Centre.  The Ministry of Food claimed the actual stock was much less than what was stated in the stock-holding account books. The other two areas of dispute between the Centre and Punjab were regarding the transportation charges that Punjab was claiming from the FCI and the infrastructure development cess at the rate of 3 per cent (the Centre was paying only 2 per cent ID cess).

It was after almost two months of deliberations that the Union Finance Ministry sanctioned the cash credit limit in December and the payment to paddy farmers could be made. However, that was done on the condition that Punjab would settle all old accounts with the Centre.

After that, Punjab started reconciling its accounts with the Ministry of Food and some money has been released for the transportation of grains and towards the infrastructure development cess that the FCI owes to Punjab. The Centre has already conveyed to the state that it will not pay for the foodgrain procured for the FCI that got rotten while in possession of state's procurement agencies over the past five years. The value of these grains was around Rs 700 crore.

All state procurement agencies have now been asked to update and submit their accounts regarding stock of grains available with them in real time to the Food and Supply Department. This will then be submitted to the Ministry of Food on a regular basis. Though the system will be in place for the wheat produced during this rabi marketing season, sources say that the position of old stocks lying with FCI will be updated later.