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G. Srinivasan

New Delhi , May 9

THE Comptroller and Auditor General of India (CAG) has detected gaping holes in the export of foodgrains by the public sector behemoth Food Corporation of India (FCI) during November 2000-February 2004 as the entire export operation was both inept and exorbitant.

In his report on commercial public sector undertakings, tabled in Parliament, the CAG said there was heavy procurement of wheat and rice which was neither justified from production point nor from offtake, leading to unnecessary piling up of stocks much in excess of minimum stocks and wheat to be held at the start of every quarter under the buffer stocking policy.

As a result, the Government had to resort to export wheat and rice with the

intention reducing carrying cost, the CAG report said.

The Ministry of Consumer Affairs, Food and Public Distribution fixed lower export price for wheat due to incorrect adoption of economic cost and higher carrying cost which resulted in additional subsidy burden of Rs 1,608.63 crore, it said.

The exporters adopted a policy of pick and choose in lifting foodgrains leading to avoidable inland movement of foodgrains involving heavy freight charges at the cost of FCI. The freight charges incurred in 22 districts examined in the audit worked out to Rs 516.36 crore.

"The high incidence of freight charges on inland movement also had the effect of reducing the net realisation from exports which fell below the issue rate for BPL (below the poverty line) category", it said.

When asked to account for this anomalous situation, the FCI management responded that the BPL rates were uniform throughout the country and FCI's foodgrains were moved from the surplus States to the deficit States by payment of freight by FCI at the consignor's end. It went on to state that payment of freight by FCI up to port town, which as per the terms and conditions for issue of foodgrains for exports, was an integral part of the export operations and "no such inference could be drawn thereon".

The audit, however, questioned the management's reply since permitting the exporters to lift the foodgrains at their discretion and involving heavy freight charges at the cost of FCI was not financially prudent and cannot be justified equating the same with the movement of foodgrains from surplus States to deficit States which is in fulfilment of the food policy and to supply foodgrains at uniform prices especially to weaker sections.

Hence, the decision of giving a free hand to the exporters to lift the foodgrain from the godowns of their choice "not only resulted in unwarranted movement of foodgrains entailing heavy expenditure on freight charges but also resulted in issuing the foodgrains below BPL rates in violation of instructions of the Group of Ministers (GoM) according to which exports were to be effected at BPL rates".

There were also many deficiencies in export operations, besides non-compliance of instructions of the Ministry such as reimbursement of road transportation charges without proper proof of payment, giving allowances when it was not required, extending undue benefit to exporters and issue of foodgrains at pre-revised rates after price revision. There were also instances of irregularities, i.e., non-recovery of penalties, non-submission of export documents, doubtful cases of exports and absence of adequate internal control mechanism.

In the light of audit of FCI's inept export operations, the CAG said while fixing the export price for foodgrains clear guidelines must be laid down, defining various terms and conditions unambiguously to avert extra subsidy burden to the Government of India.

It is also desirable that foodgrains for export should be identified as regards variety, quality and locaion of stocks.

As issue of surplus foodgrains for exports tends to become a regular phenomenon, it is imperative that a proper system is evolved for monitoring export operations. FCI should also keep proper checks and balances in place for ensuring compliance of export commitment, the CAG said.

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