Explainer: How paddy scam takes place through organised multi-layered nexus

Karnal police have expedited the investigation into the alleged paddy procurement scam, pointing it out as a well-organised, multi-layered nexus involving fake registration of farmers, manipulation of land records, digital manipulation, collusion among officials and arhtiyas, and loopholes in the system. So far, the investigation conducted by the special investigation team (SIT) has unearthed a nexus that commits this 'scam' every season, causing huge losses to the government exchequer. Here is what you need to know about how the organised nexus carries out this 'scam'.What is ‘paddy scam’ of Karnal?The paddy scam refers to large-scale irregularities and fraud committed during the procurement season 2025-26. The investigation so far in different FIRs revealed that ‘ghost procurement’ was committed at different grain markets of the district with registration of fake names of farmers as well as wrong crops on ‘Meri Fasal, Mera Byora’ portal, generation of fake gate passes and manipulation of documents and records.The police investigation also indicated that fake procurement was shown on paper to illegally claim government funds, minimum support price (MSP) payments and other benefits, without actual cultivation or supply of paddy.Who are the main stakeholders involved in the scam?The main stakeholders involved in the scam are part of an organised, multi-layered nexus. This nexus includes "fake" farmers, arhtiyas, officials from the Haryana State Agricultural Marketing Board (HSAMB) and procurement agencies, and millers. Besides, insiders misuse official user IDs and passwords to manipulate digital records. Each layer plays a specific and coordinated role, ensuring that the fraudulent transactions appear genuine in official documents and systems. During the paddy procurement season 2025-26, the Karnal police have registered six FIRs related to alleged irregularities, while the Anti-Corruption Bureau registered one FIR pertaining to the 2022-23 procurement season.These cases have brought to light multiple issues, including shortage of stock in rice mills, fake gate passes allegedly generated from external IP addresses, paddy shown as procured in official records but never physically received, and the recovery of undocumented and substandard rice. So far, six persons-including employees, millers and arhtiyas-have been arrested in connection with the FIRs. These complaints were filed by whistle-blower Vikas Sharma, a resident of Khirajpur village, who has alleged serious flaws and manipulation in the procurement process.How does misuse of the MFMB registration enable the scam?Misuse of the MFMB registration system enables the scam at the very initial stage. Fake entries are made on the MFMB portal using the names of farmers who do not own any land, government land records, land that is not suitable for cultivation, or land where crops other than paddy are grown. In some cases, the farmers are registered without their knowledge, or completely fictitious identities are created using forged documents. Fake farmers are shown as cultivating paddy through deliberate manipulation of land records and crop details. Digital entries are altered, false data is uploaded during the verification process and field-level officials collude to approve incorrect information.As a result, paddy cultivation that does not exist on land is officially recorded allows such fake crops to be approved for procurement. As per the field reports and inputs from officials of the Department of Agriculture and Farmers' Welfare, the average paddy yield this season has been around 25 quintals per acre, owing to floods, rainfall, and pest attacks. Insiders claim that this 10-quintal gap per acre has been "exploited" to regularise paddy transported from Uttar Pradesh and neighbouring states.What role do mandi officials and arhtiyas play in the scam?Mandi officials and arhtiyas play a central role in executing the scam. They generate gate passes even when no paddy physically arrives at the mandi or record the arrival of quantities much higher than what is actually brought in. As per sources, a sum of Rs 100-130 per quintal is given to officials of the HSAMB and procurement agencies by the millers and arhtiyas to manipulate the paddy, which never arrived. Fake weighment slips and quality checks are approved to show these fake entries as genuine. During peak procurement periods, when mandi yards are overcrowded and officials are under pressure, physical verification is deliberately bypassed. This timing helps the nexus carry out the fraud with minimal scrutiny.Why is the peak procurement period deliberately chosen for executing the scam?The peak procurement period is deliberately chosen because mandis handle very high volumes of paddy arrivals during this time, which puts officials under heavy workload and pressure. Due to the rush, scrutiny is minimal and physical verification becomes difficult. As a result, digital entries are often trusted without thorough ground checks.How is the misuse of user IDs and passwords involved in the scam?Misuse of official user IDs and passwords is a critical element in carrying out the scam. Login credentials of mandi officials, data entry operators are often intentionally shared, misused after duty hours, or accessed without proper accountability. This enables fraudulent digital entries, generation of fake gate passes, and approvals to be carried out in the system.

Explainer: How paddy scam takes place through organised multi-layered nexus

Police probe indicates fake procurement was shown on paper to illegally claim government funds, MSP payments & other benefits

Parveen Arora

Explainer: How paddy scam takes place through organised multi-layered nexus

Police probe indicates fake procurement was shown on paper to illegally claim government funds, MSP payments & other benefits

Parveen Arora

Unlock Premium Insights in This Article