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Central and State govts must remember: Allowing others to eat is also corruption
"Indians living in alien countries were earlier ashamed to identify their Indian origin to the foreigners because of the corruption tail attached with India," thunders Prime Minister Modi on every other day in the arranged NRI jamborees in alien lands. And all NRIs, according to our PM, are now facing the foreigners boldly with their head held high proclaiming proudly their origin, thanks to the 18 months rule of his Sarkar.
The PMO may be free from corruption charges. But a few of his cabinet colleagues, some CMs of BJP-ruled states and other minsters in state govts are carrying the stain of corruption, defying the Modi-dictates nonchalantly. Perhaps the foreigners do not treat the saffron coloured corruption as a stain. Even the corruption carries its colour complex.

All are not lucky enough to deal with PMO. Ordinary minions have to solve their routine problems through the offices of Union and State governments, thanedars, tehsildars, patwaris, municipalities and panchayats. It is better for the PM Modi to check up with the billion plus people living here in India how they see the state mandarins while paying bribes to them. Head and chest up!

In the last few days, I have come across a few scams either through the media or by my own sources duly keeping my head and chest up like a rat. I am elaborating these scams which have not been noticed or ignored so far by the NDA-II and all the state governments caring little for the PM's anti-graft thunders.

Rice Milling Scam

According to the net magazine 'The Wire' in its Nov 25, 2015 report (under the heading 'CAG blows the lid on Rs 10,000 crore rice milling scam'), the current rice milling policy was formulated by the NDA-I government in 2003. Both Central and State procurement agencies supply paddy to rice mills after buying the same from farmers.

When a government agency gives 100 kg of paddy to a rice miller, the latter returns 68 kg of parboiled rice (or 67 kg of raw rice) and is paid Rs 87 for his effort. However, he gets to retain the 32-33 kg of by-products, selling them in the open market for whatever price they fetch. According to the Central Rice Research Institute, Cuttack, rice millers on average derive 22 kg of rice husk, 8 kg of rice bran and 2 kg of broken rice from 100 kg of paddy. And over the years, the market for these by-products has become even more lucrative than for rice.

Paddy by-products find applications in a wide range of industries: power generation, solvent plants, pharmaceuticals, brick kilns and breweries. While rice bran yields oil, cattle and poultry feed, rice husk is used to generate power and its further by product - rice husk ash - has numerous industrial uses including the production of pharmaceutical-grade silica.

Going by the average price these by-products fetch in the market, the rice miller on average rakes in an extra Rs. 169 per 100 kg of paddy - over and above the Rs 87 he earns from the government. Since millions of tons of rice are processed every year, many top-notch millers are developing stand-alone by-products units for a sustainable stream of revenue catering to both the domestic and export markets. In plain terms, the state has to collect Rs 82 (169-87) from the millers for every quintal of paddy hulled without paying a penny for the hulling.

Although the market for these by-products is huge, lucrative and well documented, government agencies treat them as 'worthless' and refuse to claim any right over their further processing and sale. No wonder, then, that an evaluation of their market worth is never done. Instead, the contracts and agreements between the government agencies and rice millers give the latter unconditional 'property rights' over these by-products.

So far, the efforts of the Tariff Commission to put in place a new pricing regime seem to have come to a naught as state governments and rice millers have not provided the data the commission sought two years ago - so stiff is the resistance from the powerful lobby of rice mill owners who enjoy political patronage.

The rice milling scam would have never been brought to light but for an Orissa-based whistle-blower Gauri Shankar Jain who relentlessly pursued the case for almost five years. Thanks mostly to his efforts, the Tariff Commission - the nodal agency under the Ministry of Commerce and Industry mandated with setting prices on the basis of referrals from ministries and departments concerned - began working on a new price mechanism in 2012. Earlier this year, the Prime Minister's Office also forwarded Jain's complaint to the CAG, which decided to take up the issue for scrutiny.

In its audit report, the CAG criticises the government for its faulty policy of giving millers sole rights over the by-products of paddy. How can rice by-products, which are supposed to be the property of the state, be handed over to mill owners without any compensation, asks the CAG. Of particular cause for concern is the fact that successive governments – led by Atal Bihari Vajpayee, Manmohan Singh and Narendra Modi –persisted with a milling policy that deprives the nation of enormous revenue despite knowing the reality.

The estimates of revenue loss to the government arrived at by the CAG in its audit report stand at more than Rs. 10,000 crore every year. If we calculate the cumulative losses since 2003 - when the current milling policy was formalised - the figures stand at more than a staggering Rs. one lakh crore.

The only reason for this executive helplessness according to Jain is that "a close-knit 'family' of government [authorities], politicians and rice millers prefers the status quo. Millers are clearly afraid of losing their monopoly rights over the by-products and a very profitable business if a new policy is put in place." Sources at the CAG are candid enough to admit that the 'political will' needed to re-structure the existing tariff mechanism is completely lacking.

Power Purchase Scam

Private agencies are now operating many a power plants (coal, gas, hydel etc) and generating thousands of MW of electricity. The Union government is the authority that grants permission for the construction and operation of these power plants. One very important condition stipulated by the government while sanctioning the power plant is that the private power producer has to supply 13% of the installed capacity of that plant's electricity to the public grid at cost to cost basis or no loss no gain basis.

Not a single private power producer is following this condition. They only supply 13% of the generated power. Let us consider this case. One power plant is generating 300 MW against its installed capacity of 500 MW. In such a situation, the private agency is supplying only 39 MW (13% of 300 MW) of power to the state grid. Actually the agency has to supply 65 MW (13% of 500 MW) as per the sanctioned condition. The state grid is losing 26 MW of power due to it at the agreed price. No agency has been penalised for this default.

The scam extends further. This 13% quantum of power is to be supplied to the state grid round the clock. But the electricity authorities and power producers entered into an illegal understanding to swindle the public further. During the peak demand hours, the state grid automatically develops some technical problem and will not receive the power from the agency.

The agency will sell the power during the peak hour to other private consumers at higher rates. The state grid loses revenue by purchasing power from elsewhere paying extra rates to meet its customers' demands. The agency will supply extra power during non-peak load hours to maintain its 13% quota. The state grid will receive the power even if there is no demand. In this issue also, not a single power generator is penalised. Nor any officer punished. Perhaps the energy minister Piyush Goel is waiting for a CAG audit to take on the scamsters.

Public Money Parked in Private Companies.

Union govt has shares worth of Rs 60,000 crores in ITC, L&T and Axis Bank. This govt is cutting even health and mid-day meals allocations for want of money. It desperately tries to sell the state shares in PSU companies including the profit making ones to private companies. But the govt's shares in the above three private companies are not sold out by the current government to raise the precariously needed revenue. Any guess, why?

In the above two scams (Rice & Power), the central and state governments are collaborators over several years. In the rice miller scam, Vajpayee government can be blamed both for the faulty policy formulation and allowing the loot up to 2004. There is nothing to tell about the government that ruled the country from 2004 to 2014. That dispensation made all the earlier scams pigmies. Manmohan Singh can easily get an international award as the Scam Samrat of the world. Hence he was shown the door by the people.

From May 2014, we have a PM who repeatedly declared that corruption would be history in his rule. Neither the commerce minister Nirmala Sitaraman nor the energy minister Piyush Goel could stop the day light robberies (Rice Milling and Power Purchase) for the past 18 months. Yet the PM and his Bhakts keep chanting 'No Corruption' in Modi Sarkar. Allowing others to eat is also corruption.

Price Adjustment Scam in Odisha

Works contracts for major projects extending more than two years are normally incorporated with a price adjustment clause. This clause is inserted to safeguard the interest of both the executing agency and the state. In case of price rise of various materials like steel, cement, diesel, stone products and bricks and cost escalation of labour, a formula is adopted to calculate the extra money to be paid to the agency. In case of fall in prices also, this formula will be adopted to calculate the amount to be deducted from the agency. It is a win -win clause for both the parties of the agreement.

The price adjustment bill will be regularly raised by the contractor and the officer in charge of the project will scrutinise and release the payment to the agency. During the recent several months, there has been a steady fall in the prices of steel and cement. And the fall is quite significant. The contractors are not raising the price adjustment bill because it is a negative one. The state authorities are duty bound to direct the contractors to furnish the bill. If the contractors fail to submit the bills, the officers can very well prepare the bill and recover the money from the contractors.

This has not been done for reasons best known to the Odisha administration. Media and opposition, as in the case of the scams relating to Rice Milling and Power Purchase, keep a stony silence. Is it necessary to explain why? Perhaps the authorities concerned are also waiting for the Accountant General's audit to unearth the scam. By that time, the scam will eat crores of public money.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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