CAG report slams Maharashtra govt's cooperative, marketing and textile dept | mumbai | Hindustan Times
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CAG report slams Maharashtra govt's cooperative, marketing and textile dept

mumbai Updated: Apr 18, 2015 22:11 IST
Sayli Udas Mankikar
Sayli Udas Mankikar
Hindustan Times
CAG report


The Comptroller and Auditor General of India, in its report for 2014, has slammed the cooperative, marketing and textile department for its lax approach towards the recovery of dues from Maharashtra state cooperatives, especially sugar factories and spinning mills, most of which are facing excessive debts, despite getting bailout packages from the government.

The department, which extends financial assistance to cooperative sugar mills, spinning mills and agro-processing cooperative societies, owes the government Rs 6,930 crore in the form of share capital contributions, loans, subsidies, and guarantees for loans.

The National Cooperative Development Corporation (NCDC) grants loans to the state government, which is then passed on to the societies. If the societies default on the repayment, the state is held liable for it, and hence has to pay the principal amount, along with the interest. While the state has paid Rs 963 crore to the corporation for the defaulters from 2009 to 2014, it has recovered only Rs 155 crore, putting a huge burden on the state exchequer.

The audit report has also criticised the cooperatives department for not maintaining year-wise details of the loans sanctioned to the societies in the past five years, and failure to sign agreements when the loans were advanced without a collateral. According to the report, shutting down or liquidation of the units is the major reason for the meagre recovery of loans. The sugar factories owe the government Rs 1,333 crore in loans, spinning mills owe Rs 447 crore, and agro-processing units Rs 91 crore.

The audit report stated the government has been incapable of recovering the interest-free soft loans provided to spinning mills in October 2011. Granted to combat recession in the textile industry, the amount was to be recovered in three equal installments, after a moratorium of three years. However,of the Rs 103 crore given out, only Rs 1.67 crore has been recovered.

In case of sugar factories, the audit observed that the Rs35-crore granted to 16 cooperatives in February 2008, as share capital financial assistance for co-generation projects is yet to be repaid. Moreover, the new cooperatives that were to complete the construction within three years have delayed the work by 9-19 years, thus blocking the share capital given to them by the government for years. The Rs 59-crore released by the government for three units, too, has been blocked for long periods.