Explainer: How physical verification of rice mills exposed a ghost procurement scam

The large-scale physical verification of rice mills in Karnal district has unearthed a massive ghost paddy procurement scam that had long remained buried under manipulated records, fake gate passes, and collusion between millers, procurement officials and middlemen. Inspections revealed inflated stock entries, paddy stored outside mill premises, and wide gaps between actual and reported arrivals in mandis. Significant quantities of paddy—never brought to grain markets—were shown as “procured” on paper. Here is what you need to know about the unfolding scam:

What is “ghost procurement”?

“Ghost procurement” refers to recording paddy purchases on paper without the actual arrival of paddy in mandis. This is done by generating fake gate passes, forging procurement entries and manipulating official records. In many cases, payments were even released in farmers’ names, only to be allegedly collected later by arhtiyas in connivance with procurement officials, the HSAMB staff and rice millers, allowing millers to receive government paddy allotments without genuine arrivals, enabling diversion, recycling of old stock or substitution with grain sourced from outside Haryana.

What prompted the district administration to begin physical verification?

After the unusual arrival of paddy in different grain markets of the district despite low yields and delayed harvesting, Deputy Commissioner Uttam Singh ordered the ADC and all SDMs to conduct physical verification across rice mills to check whether the paddy allotted by procurement agencies was actually present at the mills. Verification teams found huge gaps between recorded allotments and physical stock. In one major inspection, a team led by DG, Food and Supplies, Anshaj Singh, and the Karnal DC found gross shortages and irregularities at a mill.

 What have the teams found so far?

The district-wide inspections have so far resulted in six FIRs, each exposing a deeper layer of the ghost procurement network. The first FIR was filed after a team led by SDM Anubhav Mehta detected a shortage of 12,659.62 quintals of paddy at M/s Batan Foods in Salaru. The mill owner and four mandi inspectors from different markets were named in the case. In the second FIR, an inspection team headed by ADC Sonu Bhatt found 855 MT of paddy missing from a mill in Taraori. As a result, the Taraori Market Committee Secretary and a Sub-Inspector of the Food and Supplies Department were booked. The third FIR was registered at the City police station when the officials found fake gate passes generated from IP addresses located outside the grain market. The Karnal Market Committee secretary and three other employees were booked. In the fourth FIR, a joint team of Hafed and the CM flying squad found shortages of 15,520.71 quintals at Shree Radhe Radhe Rice Mill and 8,910.53 quintals at Aggarwal Rice Mill. Mill owners were booked for large-scale diversion of government paddy. The fifth FIR followed a surprise inspection at United Foods in Shekhpura Bangar, where DG, Food and Supplies, Anshaj Singh, and the Karnal DC found a shortage of 10,050 quintals, along with a truck carrying 4,090 quintals of undocumented and substandard rice. Power meter readings indicated that the mill had not been operational for days. Two owners were booked. The sixth FIR was registered in Indri after millers Ashok Kumar and Sanjay Kumar were found storing poor quality, non-freshly milled rice—pointing to procurement from other states—along with paddy stock shortages.

How many mandis in Karnal are under scrutiny?

Eight mandis—Karnal, Gharaunda, Assandh, Taraori, Indri, Nissing, Nigdhu, and Jundla—are under the scanner. They reported unusually high arrivals inconsistent with ground realities of lower yield and delayed harvest, indicating manipulation through fake gate passes and proxy arrivals.

What was the modus operandi?

Investigation revealed that the gate passes were generated fraudulently from different IP addresses from outside the Karnal grain market. The investigation indicates proxy procurement was done at various grain markets to adjust the paddy and rice which was sourced from other states UP, Bihar and others and passed off as Haryana paddy. A network allegedly existed involving arhtiyas, procurement agencies, millers and the officials of the HSAMB help in showing the procurement of the paddy even as it did not arrive. Some mills claimed to store paddy in off-site plinths or godowns, but verification revealed that those storage claims were false or the sites were claimed by multiple mills.

Have any arrests been made yet?

After the registration of multiple FIRs, Karnal Superintendent of Police Ganga Ram Punia has constituted a special investigation team (SIT), led by a DSP-rank officer. The SIT includes members from CIA-2, the relevant local police stations, and cyber experts to trace digital evidence, including gate-pass generation and IP misuse. The investigating team members are checking the trail from farmer registration through Meri Fasal Mera Byora portal, gate pass issuance, alleged fake arrivals and payments. The SIT has arrested five accused so far—three employees in the case registered at City police station, including suspended mandi superviser Pankaj Tuli, a resident of Karnal, and Ankit and Ankush, both residents of Dabkola in Saharanpur, Uttar Pradesh, associated with the Karnal grain market. Two millers have been arrested in another FIR registered at Assandh police station. Karnal market committee secretary Asha Rani, and auction recorder Yashpal have been suspended for their alleged involvement in gross irregularities in the ongoing paddy procurement. The anticipatory bails of both have already been rejected by a district court. Hafed DM Amit Sharma and two other employees, including Ashok Kumar, field inspector-cum-store keeper and Surinder Kumar, senior manager have been suspended, for their alleged involvement in the irregularities.