Grains missing from godowns, RBI delays Rs 20,000-cr credit
Massive stocks of food grain that Punjab procures is allegedly missing from godowns, forcing Reserve Bank of India (RBI) to delay Rs 20,000 crore cash-credit limit (CCL) which the Parkash Singh Badal government has sought for wheat procurement.punjab Updated: Apr 19, 2016 10:02 IST
Massive stocks of food grain that Punjab procures is allegedly missing from godowns, forcing Reserve Bank of India (RBI) to delay Rs 20,000 crore cash-credit limit (CCL) which the Parkash Singh Badal government has sought for wheat procurement.
In principle, the value of physical food stocks in the godowns should match with the money Centre pumps in through the banks for procurement of food grains under the sanctioned CCL. But there is a yawning gap between the existing stocks and the money shown to have been spent on procurement. This gap has been widening alarmingly every year, especially under the regime of Akali Dal- BJP coalition government which has been in power since 2007. This mismatch in the food stocks and outstanding CCL is at the root of the RBI delaying the CCL sanction and seeking records of the stocks during every procurement season.
Till Friday evening, the government was awaiting RBI’s CCL nod even as the wheat procurement began on April 1. Even in 2014, the Centre withheld the CCL release asking Punjab to first settle over Rs 40,000 crore accounts of previous years with the Food Corporation of India (FCI).
It is learnt that the Badal government on Friday sent a report to the central authorities about the status of the existing food stocks along with the relevant records which the RBI and the Centre had sought.
“We are expecting the CCL sanction soon. They needed some record of 2015-16 fiscal. The State Bank of India is satisfied and has written to the RBI to release the CCL,” SK Sandhu, principal secretary to the chief minister told HT.
“The issue stands resolved. We have sent the status report of the stocks etc and the accounts sought by the authorities,” secretary food Raj Kamal Chaudhay said.
Meanwhile, in an unusual stance, as per a report in The Economic Times, the RBI has asked different banks to classify Rs 12,000 crore given to Punjab as bad loans. The RBI took this stand after findings that food grain procured with bank funds have vanished from godowns in Punjab.
“There is no disappearance of stocks as stated in a section of the media. All food grains procured over the years have been duly accounted for and handed over to the FCI, through well-documented audited transactions,” a government spokesperson countered.
Sources say the government functionaries went into a huddle after the RBI sought immediate report about the status of the food stocks and refused to give CLL sanction until past accounts were cleared. Deputy chief minister Sukhbir Singh Badal also held meeting on this issue.
“Something is seriously wrong somewhere in our food stocks… the CCL delay is worrying as over 10% of wheat has arrived in the market,” a senior Akali Dal leader told HT.
Mismatch during Congress rule
This gap in food stocks that indicates a scam of sorts and has a potential to snowball into a major controversy also existed during the 2002-07 Congress rule, a well-placed source said. But a tough-talking and straightforward bureaucrat had taken necessary steps to set the records straight despite nonchalant stance of the Congress leaders.
In April 2004, a source said, there was a gap of Rs 4,500 crore between the procured food stocks and the money spent. In other words, food grains of Rs 4,500 crore were missing.
The finance department had flagged the issue before the RBI as well as the Union government. Officers held meetings with the RBI and the Union ministry of finance to take remedial steps. The state government finally took Rs 4,500 crore “clean loan” at 8.5% interest and paid it in 60 instalments to match the gap in stocks and money spent on procurement and cleared the account books.
But after the Rs 4,500 crore loan was paid by 2009, this gap began rising again in food stocks, a source in the FCI said.
Now this gap is a whopping Rs 20,000 crore. What the RBI is trying to figure out is: Is there a diversion of money or plain embezzlement?
No misuse of funds Funds used for food procurement in national interest No ‘disappearance’ of food grain stocks Food grains procured duly accounted for Payments released directly to banks by the FCI Queries raised by FCI have been answered Gap in stocks result of the difference between actual cost and reimbursements by the Centre/FCI
Whiff of a scam
The FCI procures only 20% of food grain while five state agencies procure the remaining stock The RBI sanctions cash-credit limit Consortium of banks led by State Bank of India sanctions funds Reasons behind missing stocks are multiple: Stocks in transit; decay; gap due to filing of claims and outstanding; claims admitted but payments in process; and worse, due to diversion of money