Scam stains famed Chhattisgarh PDS, systemic loot runs into crores

Raipur: Amid Prime Minister Narendra Modi's aggressive pitch for growth and denouncement of the policy of handouts in the pre-general election campaign last year, Chhattisgarh’s model of Public Distribution System (PDS) stood out as a shining and welcome misfit. The BJP showcased Chief Minister Raman Singh model of PDS as its answer to the Congress’ Food Security Act. Besides the Gujarat model, this was the only model that found mention in Modi’s election speeches.

 Scam stains famed Chhattisgarh PDS, systemic loot runs into crores

Representational image. Reuters

Raman Singh’s two consecutive victories in the Assembly elections were believed to be because of his 'efficient' PDS and it also earned him epithet 'chawalwale baba'. Now it turns out the story was too good to be true. Earlier this month, the state's PDS made the headlines but for entirely wrong reasons.
Raids by the state’s anti-corruption bureau at the offices of the Civil Supplies Corporation (or NAN) – the pivot of the PDS circus – and the recovery of cash worth Rs 4 crore in the drawers of the babus have exposed the massive corruption in the scheme. The babus were caught in the process of distributing and forwarding the parcels of the 'monthly' shares to a list of names, believed to be that of the beneficiaries. The list included names of the top officials and politicians. The principal secretary of the department was removed and prompt denials followed of involvement of politicians and other big wigs, including the wife of the chief minister.

Soon after coming to power for the first time the state in 2003, the BJP government brought in the Chhattisgarh Public Distribution System (Control) Order, 2004 leading to a number of changes to the PDS delivery and procurement system. In 2007, on the eve of the general elections, an additional 1.9 million households (who had been excluded from the 2002 BPL survey because of the Planning Commission cap on poverty numbers) were added to the 1.33 million households already receiving subsidized food grains from the Central government at that time. This state-led initiative helped Chhattisgarh PDS increase coverage to approximately 80 percent of the rural population.

The 'Baba' won in 2008 and the formula was replicated in 2013. What was marketed as the Mukhyamantri Khadyann Sahayata Yojana in 2007 was re-packaged as the Food Security Act of 2013. Disproportionate ration cards were made before both the elections. Between August and September 2013, on the eve of the Model Code of Conduct coming into force, the number of BPL families in the state jumped from 33 to 70 lakh.

The recent raids by the ACB have brought the model under scrutiny and opened a rotten can of worms. What the ACB uncovered at NAN is the proverbial tip of an iceberg. Many believe the whole PDS racket has resulted in the swindling of hundreds of crores of the state exchequer. It is clear now that the whole business of procurement of paddy from the farmers, addition of thousands of tons of paddy smuggled in from the neighboring states like Odisha and Maharashtra, its carting and storage by the MARKFED – the co-operative arm – to the godowns, the coming into picture of rice millers, allotment of paddy to the millers, recovery of rice from the millers, supply of the rice to the PDS outlets – the total pipeline leaks throughout making the total system a fountain of corruption.

And to add to it, kerosene is another big component of the PDS.

The most prominent stone in the edifice of corruption are the bogus ration cards that were made with impunity in Chhattisgarh. While the state has only 56 lakh households, under the Act of 2013, ration cards had been made for 70.27 lakh households. In a state that has been claiming a high growth rate in the 11 years of Raman Singh’s rule, 94 percent of its total households figured under BPL, going by the ration cards issued to them.

A month after the general elections were over in May 2014, the state government set about verifying the cards and cancelled 14 lakh of these and suspended 10 junior level officials.

The records show the production of paddy increasing year after year with no apparent reasons justifying growth in that proportion. For example, in 2010-11, though the acreage increased from previous year's 3.48 million hectares to 3.51 million hectares the total jump in paddy production to 9.23 million tons was too much to escape attention of the skeptics. The official estimate for that year’s production was 6.5 MT. "Its all manipulation of the data," avers social activist Gautam Bandopadhyay.

In the election years of 2008 and 2013 the government gave away bonus of Rs 270 per quintal over and above the minimum support price of Rs 1,350. In this and many other years, the procurement exceeded the production in the fields. This excess was the direct result of the huge quantities of paddy that pours in through smuggling from the neighboring No-Bonus states like Odisha and Maharashtra during the purchase seasons.

The phenomenal increase in the procurement far exceeded the storing capacity with the government agencies. Thousands of tons of paddy were dumped in the open during the rains. The millers who sign an agreement before the season to lift paddy and mill and supply back rice to the PDS chain, refused to lift the 'damaged' grain on the pre-agreed terms and conditions. The 'tussle' between the government and the Chhattisgarh state Rice Mill Association controlled by Yogesh Agarwal, brother of the an influential member of the cabinet Brij Mohan Agarwal, caused the paddy to 'rot' more. The consequent settlement resulted in the government almost giving up on the condition of rice millers producing a bank guarantee before lifting the paddy from the storage dumps.

Following are the highlights of the scam that have come out so far:

* The government did succeed in clearing the grounds but failed to get the rice back. Notices were issues, a few FIRs were lodged but in the absence of any insurance like the bank guarantee, the efforts didn't succeed. The millers sold off the rice thus milled in the open market instead of channeling it back in to the PDS. Since lakhs of cards were declared bogus and cancelled in the subsequent year, the decreased demand from the PDS did not raise alarm due to non-recovery of rice. No wonder Chhattisgarh has seen a phenomenal growth in the number of rice mills in the state after the BJP government came into power in 2003. The number went up from around 300 to 1,543 by the end of the 2013 according to the official figures and hovers around 1,600 now.

* The bogus ration cards added another chapter to the story. In the election years, cards were distributed to all and sundry. Virtually every second member of the family ended up having a card. In months preceding the 2008 assembly elections, in some districts the number of ration card holders exceeded 70 percent of the population, according to a letter written by the then state food secretary the collectors.

* The card entitled its holder to receive 35 kg of rice for Re 1 a kg. The excess cards helped grow a parallel economy in the state. The 2013 PDS model had eliminated the class of PDS shop owners and replaced it by committees of people generally nominated by the government on the recommendation of the party. These committees became the de facto credit institution in the villages. The ration cards got converted into commodity. One card fetched a 'loan' of up to Rs 5,000.

* The modus operandi of milking this card was simple. The rice miller milled and sent the rice to the NAN warehouse. The demand from a PDS distribution centre (shop) was raised based on the number of the cards (roughly multiplied by 35) and sent to the warehouse. The NAN officials released trucks carrying these demands to shops. The entries duly made in the cards in possession of the committee and the rice thus left un-lifted was then diverted back to the rice mill from where it had originated, completing the cycle. The same rice was again pumped into the supply chain.

* Kerosene: The state receives 16,000 kilolitre of it as its share from the Centre. Only around 3,000 kilolitre of it gets distributed through the PDS shops at Rs 20 per litre. The rest – worth almost Rs 40 crore - is siphoned off every month to the petrol pumps and industrial units at rates varying between 35 and 40 making it a racket worth Rs 500 crore in a year.

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Updated Date: Mar 18, 2015 22:18:06 IST