CAG blasts government, FCI for shockingly poor food management

The Comptroller & Auditor General of India has strongly criticised the Food Corporation of India (FCI), the central grain procurement and storage agency, for gross inefficiencies resulting in huge losses to the government exchequer and the general public.

The country's top audit watchdog has highlighted FCI's increasingly inadequate storage capacity. This storage gap and other FCI policies led to food spoiling in a nation where millions still go hungry every day, the CAG report observed.

The report was tabled in the Lok Sabha on Tuesday, but passed unnoticed amid political drama that included the opposition's continuing blockage of parliament and the results of the Karnataka elections, which saw the Congress back in power in the state after six years.

The CAG report said that the storage gap widened to 331.85 lakh metric tonnes (LMT) from 59.95 LMT in the six-year period between 2007 and 2012.

The report said the government's efforts to address the issue were inadequate.

''The storage gap in FCI against the central pool stock witnessed a steady increase during the period 2006-07 to 2011-12,'' it said.

''Against the storage gap of 332 LMT as of March 2012, GoI [government of India]/FCI envisaged capacity addition of only 163 LMT during the six-year period under various augmentation programmes. Of this, only 34 LMT was completed as of that date.''

Even as storage capacity remained inadequate, existing capacity was not completely utilised, the national auditor observed. It said utilisation of existing storage capacity in various states and union territories was less than 75 per cent in most of the months between 2006-07 and 2011-12.

Using India's grain bowl of Punjab and Haryana as a major example, the CAG said this underuse of existing capacity had resulted in unnecessary expenditure of Rs376 crore in the twin states during the five-year period as FCI didn't use the space it had.

Though there was a steady increase in the foodstock procured by government agencies, it didn't match allocation requirements under various government schemes, CAG said.

''The average food grains procurement of 514 LMT during the period 2006-07 to 2011-12 was lower than the average allocation of 593 LMT made by the government to states under the targeted public distribution system (TPDS) and other welfare schemes (OWS),'' the report said.

The CAG also noted that more than 1 lakh tonnes of wheat, worth Rs121.9 crore, was damaged while in the custody of Punjab and Haryana's agencies, because they did not adhere to the first-in-first-out principle.

"Failure to utilise the vacant storage space due to short planning of direct delivery of wheat resulted in avoidable expenditure of carryover charges of Rs375.52 crore during the period 2006-07 to 2011-12," the report says.

The state government agencies (SGAs) are tasked with collecting the wheat for a Central Pool, which they then have to provide to FCI immediately.

The FCI has to pay a carryover charge for any amount of wheat that is not taken over after 30 June of each year - expenditure that ideally should be avoidable, the CAG points out.