Avoidable outgo of Rs 375 cr incurred by FCI in FY '12: CAG

State-run Food Corporation of India incurred an "avoidable expenditure" of Rs 375.52 crore during the period 2006-07 to 2011-12 due to its "failure" in utilising vacant storage space in Punjab and Haryana to keep wheat, according to the Comptroller and Auditor General (CAG).

CAG also observed that 1.06 lakh tonnes of wheat worth Rs 121.93 crore under the custody of state government agencies of Punjab and Haryana were damaged due to "non-adherence to first-in-first-out (FIFO) principle."

Another Rs 42 crore worth wheat was damaged due to poor condition of storage facilities, it added.

In a report on FCI's foodgrains management tabled in Parliament, CAG said: "Failure to utilise the vacant storage space due to short planning of direct delivery of wheat resulted in avoidable expenditure of carryover charges of Rs 375.52 crore during the period 2006-07 to 2011-12."

Giving details, the Auditor said FCI did not take direct delivery of wheat to utilise vacant space within Punjab and incurred an avoidable expenditure of Rs 316.52 crore on carryover charges reimbursed to state government agencies (SGAs).

Similarly, an expenditure of Rs 59 crore as carryover charges could have been avoided in Haryana, it said.

SGAs procure wheat for the Central Pool which they have to deliver to FCI immediately after procurement. For any quantity of wheat not taken over after June 30 each year, FCI has to pay carryover charges to them for holding the stock.

During the six year audit period, FCI paid to SGAs as much as Rs 6,227 crore. The last three years accounted for 85 per cent of total expenditure on carryover charges, CAG said. The storage capacity utilisation on the basis of monthly stock level ranged between 33 per cent and 57 per cent during 2006-07 and 30 per cent and 66 per cent during 2007-08. During 2008-09 to 2011-12, the capacity utilisation was in the range of 57 to 91 per cent, it added.

On damage of foodgrains stocks, the CAG said: "Audit observed that poor conditions of storage facilities for foodgrains stock of the central pool maintained by state government agencies (SGAs) in Punjab and Haryana resulted in damage of foodgrains."

Audit report

The CAG selected two SGAs each in Punjab and Haryana, being the large procuring states in the country, for assessing the damage.

"The value of 32,772 tonnes damaged food stock amounting to Rs 42.14 crore is based on audit of selected state government agencies of Punjab and Haryana. The observation of audit were based on sample selection and to that extent the amount involved is significant," the report said.

The Auditor emphasised that scrupulous adherence to FIFO principles (grains first procured first sold) is essential to ensure that old crop stock with FCI and state government agencies does not pile up in the future particularly in view of the substantial increase in procurement efforts in the recent years.