The CAG estimate of the irregularities, amounting to over R40,000 crore, in the public procurement and milling of paddy for subsidised sale under the Public Distribution System (PDS) exposes the deep rot of India’s crony socialism. The CAG report found, between FY10 and FY14, nearly R18,000 crore was paid as minimum support price to farmers without any authentication—there were no proof of land-holding, no procurement certificates, nor any document upholding farmers’ particulars. These ghost beneficiaries were from five states—undivided Andhra Pradesh (now Andhra and Telangana), Punjab, Haryana and Uttar Pradesh. Similarly, a little over R3,700 crore of undue benefits accrued to millers in Andhra Pradesh, Chhattisgarh, Punjab and Uttar Pradesh with unmilled rice sold to them at prices that didn’t factor in the potential realisations from paddy milling, such as husk (part of cattle feed), bran oil, etc.
The abject waste of resources and entrenched corruption that India’s public procurement, led by the Food Corporation of India (FCI), and PDS have become synonymous with can only be checked if procurement policy undergoes a thorough overhaul. A first-step would be to adopt the measures for FCI reforms suggested by the Shanta Kumar panel that reduce both, the government’s procurement and distribution commitments. This, of course, has to be supported with fixing the farm policy, introducing Aadhaar-verified direct transfer of benefits, withdrawing crop-specific price support and a host of other measures.