Government Cracks Down On FCI Racket

'The corruption charges in FCI are not the first and won't be the last.'

A few weeks ago, the Central Bureau of Investigation in a massive crackdown on the Food Corporation of India conducted searches at around 99 locations across the country and recovered cash amounting to Rs 1.03 crore (Rs 10.3 million) and fixed deposit receipts of around Rs 3 crore (Rs 30 million) along with property documents in an operation called 'Kanak'.

'Kanak' is also the local name for wheat in some parts of north India where the bulk of the searches and raids were concentrated and is one of the key commodities -- the other being rice -- in which the state's food procurement and distribution operations deals.

The CBI booked 74 accused after a six-month long undercover operation to identify suspects in a syndicate of officials, rice mill owners and middlemen, among others, who were allegedly indulging in corrupt practices.

In its first information report, the CBI alleged that FCI officials connived and showed undue favours to several grain merchants, rice millers and shellers (units that de-husk the rice after it is cleaned and destoned) in procuring low-quality grain and sending it to different parts of the country to avoid detection.

The CBI also said that FCI officers charged bribes ranging from Rs 1,000 to Rs 4,000 per truck of inferior quality grain unloaded at godowns from private millers.

The bribes were then distributed among officers at every level reaching up to the headquarters in a well-defined percentage of cuts at each level, it alleged.

The crackdown came as a wake-up call to the government, with Food Minister Piyush Goyal warning of strict action against the erring officials and also promising to clean up the system so that such incidents aren't repeated in future.

FCI suspended two senior officers and transferred as many as 30 others following the CBI crackdown.

The suspension and transfers were ordered to ensure that the subsequent investigation would not be influenced in any way.

Food Secretary Sanjeev Chopra also announced a host of other structural corrections in FCI to ensure that such incidents do not occur in future.

The Centre, he said, is moving towards curtailing the discretionary powers of FCI's field officers and increasing the level of automation at various points.

'We are not only taking action against the erring officials but at the same time trying to address the systemic issues by reducing the discretionary powers of the field officers,' Chopra said.

The whistle blower policy in FCI is also being widely disseminated and publicised so that more people come forward to reveal the wrong doings, Chopra said.

To ensure that field officers don't have the power to physically verify the quality of grains being supplied to the corporation by millers and shellers, the secretary said that automatic grain testing machines are being set up in around 50 locations across the country.

A policy has also been put in place where if any miller brings FAQ [Fair Average Quality] grain to the depot and still feels that he is being harassed he has the right to access a Quick Response Team for redress.

The corporation is also developing a system under which the grain miller can verify the amount of space available in the godowns online, so that there is no arbitrariness and malice.

An open and automated system of verifying will also end reliance on godown staff and officials in charge to know how much space is available for the miller to store his grain by checking the veracity of such claims.

Though the efficacy of these measures are yet to be tested, the fact is that FCI, which was set up in 1965 under an Act of Parliament to address chronic food shortages in India at the time, remains vulnerable to corruption by the very nature of its operations.

It flows from the enormous power that corporation's officers wield in procuring and distributing food grain to the country's massive public distribution system.

So do these 'reform' measures indicate that FCI has a structural problem that needs correction?

"The corruption charges in FCI are not the first and won't be the last as far as I'm concerned. In Punjab, procurement of rice many times has been more than the state's production," eminent agriculture economist Ashok Gulati told Business Standard.

"These are structural problems typical of a large public sector undertaking. An answer to all these is to go for cash transfer and allow people the option to forgo grains for cash," added Dr Gulati, the Infosys Chair Professor for Agriculture at the Indian Council for Research on International Economic Relations

"This is not a FCI-specific problem. Who can say that such connivance between millers and state officials doesn't take place in states with decentralised procurement where FCI's involvement is minimal?" asked a former food secretary.

Alok Sinha, another ex-FCI chairman and a well-known name in the field of food management and agriculture, said contrary to pointing fingers at FCI, it should be praised for promptly taking action and not trying to brush things under the carpet.

FCI annually handles over 60 million tonnes of grains, on average.

"Even if 100,000 tonnes is found to have been procured of low quality, action is taken against such wrong-doers promptly. So the Corporation and investigating agencies should be commended instead of being castigated," Sinha said.

"It's wrong to say that problems in FCI are structural because of one single incident, it is just a one-off episode that has been handled efficiently," emphasised Sinha.

With procurement for the rabi marketing season set to begin in weeks, the proof of these observations will be put to the test.

Feature Presentation: Rajesh Alva/Rediff.com