CAG finds Rs 50,000-cr payment irregularities in paddy milling charges

Food ministry says non-inclusion of by-products in milling charges incorrect

The Comptroller and Auditor General of India (CAG) has found procedural irregularities amounting to Rs 50,000 crore in payment of paddy milling charges by the Centre to rice millers across the country between 2009-10 and 2013-14, when Congress-led United Progressive Alliance was in power.

The report tabled in Parliament by CAG on Tuesday also showed that Rs 17,985 crore was paid as minimum support price to farmers during 2009-10 to 2013-14, without verifying whether the same amount was actually transferred to them by the millers, Food Corporation of India (FCI) or state agencies.

The government pays nearly Rs 48 per quintal to millers for processing the paddy it procured from farmers to sell as rice through public distribution system. Of this, Rs 33 per quintal is discounted as byproduct charges, while the rest is paid to the millers. The charges are paid either by FCI or state governments.

The CAG audit, which for the first time looked at the central expenditure on paddy milling charges, found the actual value of byproducts left after processing is much more than the Rs 33 per quintal discounted by the government. This means, during the period under consideration, an excess amount of Rs 3,743 crore was realised by the paddy millers of Andhra Pradesh, Chhattisgarh, Telangana and Uttar Pradesh from sale of these byproducts.

In a statement released soon after the report was tabled, the food ministry said non-inclusion of byproducts’ value in milling charges was incorrect.

“For reimbursement of milling charges to the state governments, the food ministry has adopted a rate structure based on the recommendations of the Tariff Commission and it is not practically feasible for FCI or government agencies to take over the byproducts derived from the processing of paddy and market them out,” the statement noted.

The audit showed that around 8.24 million tonnes of paddy valued at Rs 9,788.5 crore procured by state agencies in Punjab during 2010-11 to 2013-14 was of poor quality even though full payment for the same was made.