Rs1,098-crore gap crops up in paddy procurement, rice delivery

Punjab has no money despite a budgetary provision in the state budget (made for the first time), to pay up the gap.

A gap of Rs 1,098 crore has come to the fore in the procurement of paddy by five state agencies of Punjab and the rice they delivered to the Food Corporation of India (FCI) during the 2016 kharif season.

Officials in the state food department said for transportation charges, state procurement agencies were reimbursed Rs 200 crore less than what was actually spent. (HT File/Representative image)

As the Centre had ring-fenced the cash credit limit (CCL) last year (no fresh funds for procurement unless CCL received during the previous procurement of same crop is not cleared), Punjab had to clear the gap by paying up the lending bank, i.e. State Bank of India.

But Punjab has no money despite a budgetary provision in the state budget (made for the first time), to pay up the gap. “Whatever the case, we have to arrange the said amount before October 1 when the paddy procurement begins (for 2017 kharif season),” said KAP Sinha, principal secretary, state food and civil supplies department.

Sinha said the major portion (Rs 500 crore) of this cropped up due to the gap in the cost of gunny bales procured by the state for procurement and that the money reimbursed by the FCI. Information gathered by HT reveals that a gunny bag in which 50 kilogram paddy is taken from a mandi to the mill costs state Rs 64.53 while the state is reimbursed Rs 56.06 for a bag apiece.

Officials in the state food department said for transportation charges, state procurement agencies were reimbursed Rs 200 crore less than what was actually spent. “Of the total (Rs 1,098 crore) gap, interest imposed is Rs 200 crore,” said an officer in the state food department.

Rs 50 crore is due to 1% difference in the infrastructure development cess claimed by the government and what was being reimbursed by FCI. Punjab claims 3% cess on the total food grain procured while the Centre reimburses only 2%. An official in the state food and civil supplies department said, “The major gap has cropped up due to the fact that the Centre was not willing to accept the actual amount we are paying.

“It is mandatory to take gunny bags from the Jute Corporation of India at a rate quoted by it but ironically the reimbursement is not made at the same rate,” he said. Punjab requires at least 10 lakh gunny bales (50 crore bags with one bale having 500 bags) before the onset of every procurement season.

In March this year, the Centre converted Rs 31,000 crore as term loan to Punjab for the gap that cropped up during the past procurements since 1994. The state had to pay Rs 270 crore every month for 20 years to clear the loan.