Haryana: Rice millers make most of poor recovery terms
Neeraj Mohan
New Delhi, December 15
The Custom Milled Rice (CMR) scam, which initially came to light in Haryana during the 2013-14 kharif marketing season, has evolved into a protracted saga of governmental oversight and rampant malpractices within the state’s CMR policy.
Case pending for years
- In 2014-15, Shakti Trading Company in Dand of Kaithal district was given 8,057 MT paddy for milling
- The rice miller had to return 5,398 MT to the government but returned only 2,130 MT
- Nearly 3,302 MT worth Rs 8.12 crore is default
- The owner of the rice mill was booked next year but he managed to get bail
- The case is pending in court
This scam was first noticed in 2015 when 16 rice millers in Karnal failed to return 3.24 lakh metric tonne rice worth nearly Rs 109.95 crore to government agencies, turning into defaulters in 2015.
The authorities failed to promptly address underlying issues in the CMR policy, allowing the scam to fester and spread roots to neighbouring districts of Kurukshetra and Kaithal. Over the ensuing decade, the number of defaulter rice millers in these three districts ballooned to 65, accumulating a staggering debt of Rs 344 crore by evading recovery efforts for years.
The CMR Policy and its flaws
Under the CMR policy, the Haryana Government outsources the entire procurement process, transportation and storage of non-basmati paddy on MSP to private rice millers of the state. In return, rice millers are mandated to return 67 kg of milled rice against every quintal of paddy procured to the state government within a specified timeframe ranging from May 30 to September 30 of the year next to the one in which the procurement was done.
Rice millers are allowed to sell the remaining 33 kg of the remaining procured rice to recover their milling and transportation costs. When they fail to return the mandated 67 kg milled rice/quintal procured, they are called defaulters.
Every registered rice miller is permitted to procure 4,000 MT of paddy (estimated value being nearly Rs 8 crore) by showing at least Rs 10 lakh Fixed Deposit Receipt in their respective banks. Beyond the 4,000 MT threshold, they must show an extra Rs 5 lakh fund in their banks for additional procurement of 1,000 MT.
Even those who lease rice mills are allowed to procure up to 4,000 MT on the same terms. There is also a provision of two guarantors (can be arhtiyas or some other rice miller) who need to provide cancelled cheques to the government assuring payments in case of default.
Millers are also required to submit details of property, including rice mills and godowns which the government can pledge to recover default if any.
Despite the provision of regular physical verification of procured paddy stocks, rice millers manage to sell rice in the open market. Intriguingly, many properties pledged by rice millers under the CMR policy are mortgaged to banks against substantial loans.
Rice millers also take advantage of nominal security deposit against the value of the paddy they get for milling.
Modus operandi
Investigations reveal that rice millers procure paddy worth several crores taking advantage of the nominal security deposit which can vary every year and is 1.21 per cent of 4,000 MT procured for the current season. That comes to Rs 10 lakh.
Some case studies suggest that in 2016-17 milling season, NR Rice Mill of Cheeka in Kaithal was allowed to make procurement and milling of a total 3,762 MT paddy worth Rs 5.53 crore against a security deposit of Rs 7 lakh (as per the security deposit rate of that year) and the rice mill returned only 1,644 MT rice out of 2,520 MT they were mandated to return. Nearly 876 MT of milled rice worth Rs 2.66 crore remained unreturned.
In 2014-15, Shakti Trading Company in Dand of Kaithal district was given 8,057 MT paddy for milling and the rice miller had to return total 5,398 MT rice to the government but returned only 2,130 MT. Nearly 3,302 MT worth Rs 8.12 crore is default. The owner of the rice mill was booked next year but he managed to get bail. The case is pending in court.
