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Justice Wadhwa Committee on Public Distribution System

STATE OF BIHAR

Index

Chapte

Topics

Page. No.

rs

A

Preliminary

1-7

B

Broad overview

i-x

1

Introduction

1-4

2

Legal Regime

5-18

3

Distribution of foodgrain

19-62

4

Transportation

63-68

5

Mode of Appointment of FPS Dealers

69-74

6

Viability

75-88

7

Identification of BPL

89-96

8

Food Coupon scheme

97-110

9

Vigilance and Enforcement

111-125

10

Computerisation

126-128

11

Recommendations

129-140

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CENTRAL VIGILANCE COMMITTEE ON PUBLIC DISTRIBUTION SYSTEM

REPORT ON THE STATE OF BIHAR

BROAD OVERVIEW

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1. Public Distribution System (PDS) is synonymous with corruption. Bihar is no different. There are two corrupt sectors in PDS, one is distribution of food grain and the other is distribution of Kerosene Oil. In PDS it is the Fair Price Shop (FPS) which is the breeding ground of corruption. In one report we have said that there is a web of corruption woven around FPS by its owners, politicians, bureaucrats, officials of Food and Supplies Department, Civil Supplies Corporation and the transporters. FPS is an important link in the PDS but then it is the FPS which is the epicenter of corruption. It is common knowledge to all, whether he be a politician, bureaucrat or any other public servant that an honest FPS owner cannot survive from the income earned from PDS and that he has to indulge in diversion of food grain in black market. PDS food is meant for the poor. There being no sustainable income for the FPS dealer, yet there is clamour for allotment of FPS. The answer is not far to seek. All are involved in this crime whether be it a transporter or an official or a bureaucrat or politician.

2. No doubt that FPS is not a profitable proposition. But then it is also apparent that the FPS owners are not interested in selling other grocery items from the shop. No amount of increase in commission even by 100%, to an FPS owner will make his shop viable for him to earn sufficient income. An FPS owner can certainly add to his income by selling grocery items from his shop but, it would appear, greed overtakes to make a quick buck from the black-market and to share his ill gotten income with corrupt officials, politicians and transporters. There is no prohibition from the State for the FPS owner to sell other non-PDS items from his shop. Diversion is lucrative business considering the vast difference between the PDS food-grain price and the market price.

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  • 3. PDS is undoubtedly the largest food distribution network of the kind in the world. While procurement, storage in FCI godowns and allocation of food grain to the states is in the hands of the Central Government distribution is done through the Fair Price Shops licensed by the State after identifying BPL and AAY population as per the estimation fixed by the Planning Commission and the distribution is done.

  • 4. Central Government has fixed total number of BPL families in Bihar as 65.23 lakhs. In 2007 Bihar State conducted survey of BPL families which has thrown up a total number of 1.23 crores BPL families in the State. There were inclusion and exclusion errors and objections were invited. Nearly 57 lakhs such objections have been received. It is stated that it would be reasonable to assume that after disposal of these objections, at least 40% to 50% of these families will be added in the existing BPL list thus increasing the total number to 1.5 crore BPL families. One can judge the enormity of the problem.

  • 5. Central Government allots food grains for 65.23 lakhs families at the rate of 35 Kg. (25 Kg. rice + 10 Kg. wheat) per family per month. In order to meet the requirement of 1.23 crores BPL families, State Government has reduced the allocation to 25 Kg. (15 Kg. rice + 10 Kg. wheat) per family per month primarily because under the new BPL survey the average family size stood reduced from6.16 to 4.38 persons per family.

  • 6. State Government is somewhat able to manage the quantity of rice required for distribution because of scaling down the allotment of rice from 25 Kg. to 15 Kg. but shortage for wheat remains. Though

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the State Government has made a provision of Rs. 868 crores approximately to fulfill the entire requirement of food grains for covering all the BPL families it has however, not made any purchases for arranging wheat from its own budget (For the present, the State Government has allocated Rs. 60 crore for this purpose – Letter No. – BPL – 04/08 of Food Secretary, State of Bihar). It was found that to meet the requirement of food grain the State Government requires FCI to shift food grain from one godown to another which entails delay and results in backlog. In some cases there is insufficient food grain allocation for a particular month in a given district, the food grain in that district is allowed to lapse causing non-availability of food grains to beneficiaries. To fill up the gap State has made no purchases of food grain so far resulting in backlog and even lapsing of allocation, the ultimate sufferer being the poor for whose benefit TPDS was evolved.

7. There are other factors leading to backlog and lapsing of PDS food grain allocation. These factors are shortage of storage space in BSFC godowns, non-availability of trucks to transport the food grain and non payment of cost of PDS food grain within time allowed by the FCI. Of course, the reason given by the BSFC for non-deposit is the failure of FPS dealers deposit the amount within time. To meet this difficulty, the State Government has allowed BSFC to spend 25% of the cost of foodgrain from its own sources to lift the foodgrain timely from the FCI.

8. Central Government is proposing to introduce the National Food Security Law which would provide statutory framework to ensure food security to all. But the law will be rendered futile like the PDS system if it does not come up with an appropriate mechanism for its implementation. During the meeting with the officials of the State

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Government, the Chief Secretary Mr. R.J.M. Pilai informed the Committee that State Government has given its response to the proposed National Food Security Act. This enactment, which is yet to come into force makes provision for the supply of 25 Kg/ of food grain every month to a BPL family at the average rate of Rs.3/- per Kg. Proposed comments on the Background Note by the State Government and letter dated 30.6.2009 of the Chief Minister of State of Bihar to the Central Government, were given to the Committee for perusal. There are two basic issues presented by the State Government. One, if the number of BPL families is fixed by the Central Government in advance, then the task of identifying these beneficiaries should also be carried by the Central Government only. It is pointed out that the regime of identification of BPL families restricted to the targets fixed is a dispensation which is not acceptable to the State Government. The second proposition is that objectives of proposed National Food Security Act can be met more effectively by adopting a system of cash transfer to the beneficiaries instead of resorting to a complex delivery mechanism, fraught with possibility of diversion as well as errors of inclusion and exclusion under the TPDS. State Govt. pointed out that it is not prudent to link the procurement operations under the regime of MSP to the requirements under TPDS since the objective of MSP operations is to primarily ensure remunerative prices to the farmers in the country and therefore, it should not be constrained by any targets in this regard. With reference to the suggestions in the concept note of the Central Government about the need for a fresh survey and 5-year validity of ration cards issued thereafter State Government’s view was that it felt strongly that the Central Government should institute a regular Commission for this task and this Commission can undertake the task of review of BPL list. State Government commended the proposal that only families

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relatively lower level within APL category will be allocated food grains if at all some allocations are to be made to this category. (It may be pointed out that this Committee in its report for Delhi had made such a proposition. State Government also pointed out that it had not so far been getting even 10 Kg. per APL family under TPDS.) State Government also supported the proposition in the concept note that individual may be made unit for entitlement instead of the family.

9. State Government has not issued ration cards since January 2008 which is mandatory under the Public Distribution System (Control) Order, 2001 issued by Central Government under Section 3 of the Essential Commodities Act 1955.

  • 10. PDS food grain is being issued to the beneficiaries, whose names exist in the survey list by means of coupons. Though the ration cards are lying printed, but these could not be issued as the software to print the ration card has provision to in clued the name of only head of the family. State Government took a decision to incorporate the names of all the family members on the ration cards. A fresh survey was ordered in February 2009 and directions were to complete the survey within three months. Committee was informed that survey has yet not been completed and it was not certain as to when it would be completed. The State Government informed the Committee that the examination of the objections to the survey list was likely to be completed by August 2009. The BPL list is thus not complete till all the objections received are examined. In these circumstances, food coupon scheme was introduced to keep the check on the distribution of PDS foodgrain to the beneficiaries in the absence of ration cards.

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  • 11. Newspaper reports suggest that as far back as June 2007 Bihar launched a coupon system aimed at checking malpractice and encouraging better service at ration shops distributing essential commodities to poor families. It is a known fact that corruption and malpractice is rampant in Bihar. Ration card holders were often turned away from the FPS and large quantity of food grain meant for poor was sold in the open market. As per the estimate of the Planning Commission more than 50% of PDS food grain finds its way to black-market. However, the coupon system so introduced could not succeed because of these problems, and large scale irregularities detected in the BPL list. Newspapers reported that many poor had been left out of the list while those above poverty line including gazetted offers had made it to the BPL list. State Government therefore, proposed to rectify the BPL list.

  • 12. Present coupon system was introduced in June 2008. Coupons are colour coded - yellow for AAY, red for BPL and blue for kerosene oil. Committee has devoted a separate chapter on the working of coupon system in the State. Committee has found various draw-backs in the working of the coupon system and made various recommendations to streamline its working and stamp out the irregularities in the functioning of the coupon system. It appears coupon system was introduced with all the good intentions but in the absence of ration cards the system does not ensure that the PDS food grain goes to the correct beneficiary. With huge backlog in distribution; no check in collection of coupons by authorities; allocation not being made on the basis of coupons collected and yet full allocation being made to FPS every month based on number of beneficiaries/coupons attached to that shop, the whole system has fallen into shambles.

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  • 13. On 15.2.2007 State Government issued a notification under the Public Distribution System (Control) Order 2001 after taking prior concurrence of the Government of India. This Notification/Order was issued by the State Government in connection with Fair Price Shops as to issue of licence, suspension and cancellation thereof, terms and conditions and regulate sale and distribution of essential commodities. Aforesaid State Order prescribes procedure for issue of licenses, constitution of Selection Committees for issue of license and factors to be taken into account for appointment of FPSs. It is stated that for over the last five years no new license has been issued for FPS only some have been issued on compassionate grounds. The Selection Committee has to take into consideration, the following factors for appointment of FPS:

“2. Now, for new license approval of the Food Supply & Commerce Department is not required.

2.1 The Selection Committee shall take following facts into process in course of appointment of Fair Price shops

  • (i) According to 2001Census, 1350 population in Urban

areas and 1900 population in Rural areas have been fixed as one of the criteria for appointment new shop under Public Distribution System. (ii) There is a need to ensure that consumers need not travel more than two kilometers for accessing Fair Price Shops both inb Urban and Rural areas. (iii) For remote and inaccessible area especially areas dominated by Scheduled Caste/Scheduled Tribe Fair Price Shops may be appointed for a population of 1,000.

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(iv)

Reservation in allotment

follows:-

of Fair Price

Shops are as

Scheduled Caste

- Scheduled Tribe -

16 percent 01 percent 18 percent

Most Backward Class -

Backward Class - 12 percent

Women Backward Class-

03 percent

Compliance of above mentioned reservation shall be applicable to future vacancy.

  • 2.2 Reservation Criteria shall be applicable at Ssub

Divisional Level.

  • 2.3 Following people and Institutions shall be given

priority in allotment of Fair Price Shops, excluding

compassionate cases.

  • 2.4 Priority for issuance/New licence

shall

be

as

follows

  • (a) Self help Group

  • (b) Gram panchayat

  • (c) Co-operative Society

  • (d) Women/Co-operative Society run by women

  • (e) Ex-Army co-operative Society

  • (f) Handicapped

  • (g) Educated unemployed

  • (h) Preference should be given to the applicant who is

resident of concerned panchayat or ward.

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2.5 Compassionate

Cases:-

On

priority

basis

wife/husband, son, unmarried daughter, daughter in law, widow of deceased son would be allotted shops. Affidavit for no objection shall be obtained from rest of dependent as mentioned above. This application shall be accepted from the dependent within the two years from the date of death of the licensee.

  • 14. The notification/order also prescribes payment of licence fee, duties and responsibilities of FPS dealer, working hours and holidays, and also suspension and cancellation of licence and the appeal thereafter. If orders given by any officers below the rank of District Collector then aggrieved can file appeal to the District Collector. If order is passed by District Collector then appeal shall be filed before Divisional Commissioner. Appeal shall be filed within 30 days from the date of the order.

  • 15. Committee found that there has

not been any criteria

for

fixing of number of beneficiaries to each FPS. It could be from 125

to 1200. Committee examined the probable income that an FPS

could derive with 500 beneficiaries (red cards) attached to it. From

the Government

records it would be Rs.3550/- per mo nth and if

kerosene oil is taken out, it would be Rs.2050/- per month.

Of

course, the calculation would show that proper expenses which an

FPS owner may have to incur, have been given correctly.

In any

case an FPS with 125 cards would certainly be incurring loss.

For

one thing the cards for each FPS should have been rationalized and

it should

be a condition

that every FPS owner shall run a kirana

show for selling non-PDS items in the FPS.

With such a state of

affair that there can be no proper income from

FPS

for

a family

having husband,

wife and three children,

it is specious to fix the

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categories of the persons to whom FPS can be allotted. It must be known that FPS is meant for poor people and not for the benefit of dealer. Allotment of FPS is not a largesse bestowed by the State for giving any benefit to a particular person by granting a licence of FPS when there is no income. It would appear that the State is also encouraging corruption. In various public meetings it was openly admitted that FPS owner indulges in black-marketing PDS food grain is diverted by the FPS owner in connivance with officials whom he bribes. This was so stated in the very presence of the officials. In fact in the President of the FPS Dealers Federation stated that their indulging in black-marketing may be said as Kaala

Bazari (kalaa) but in fact it is art i.e. Kala Bazari

( klaa )

by

which FPS owners are able to earn for their livelihood.

When an

official present in the meeting asked “why do you give bribe?

Immediate retort was “why do you accept?” No one is in doubt that

diversion of PDS foodgrain is done

with

the connivance of the

officials. It was stated that in rural areas the minimum income of

FPS owner should be about 12 to 15 thousand per month and in urban areas about Rs. 20 thousand per month. The Committee, therefore, could not suggest any increase in commissions payable to FPS dealer. The clamour for allotment of FPS shop cannot be explained by any other way except that earning of fabulous income

from

black-marketing and status that an

FPS dealer gets

in

this

locality.

Against the price of 1 kg of wheat at the rate of about

Rs.4/- in the PDS in the market it is Rs13/- per Kg. which fetches

about Rs.9/- in the black-market.

  • 16. There have been many cases of diversion by transporters. It appears that the transport contractors offer very low rates and they make up their losses by diversion. A situation has come where the transporters have been allowed to take the system to ransom. In

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Patna no transporter came forward to give the tender and now the BSFC has to engage the same transporters at higher rates on daily basis.

  • 17. Enforcement and vigilance in Public Distribution System are non-existent. There is no complaint mechanism and an aggrieved consumer has nowhere to go for redressal of his grievances. The Police only investigates cases handed over to it by the department and does nothing on its own to check the theft of valuable food grain. The vigilance committees have either not been constituted or are too unwieldely to act efficiently. The structure of constitution of committees is such that at places it has as many as 72 members. They are constituted of political persons from various recognized parties who may instead bring political agenda to the meetings. The State Govt. is now proposing to give Rs.100/- per sitting to each non-official member for him to take part in the meetings. For a vigilance committee to function properly it has to be of small-scale with a earmarked place to meet every one/two months on a fixed day and time. Minutes of the vigilance committee have to be scrutinized and action taken.

  • 18. Considering various features in the working of PDS during its visit to Bihar the Committee has given its recommendations. Details of distribution of food grain with all its implications have been given in Chapter 3. To weed out corruption in PDS it is the information technology which can help. Human intervention has to be minimal. System has to be devised in such a way that issue of food grain from FCI godown and that received by the beneficiary match. Central Govt. has already embarked upon the scheme of introduction of Smart Card in PDS in the site of Haryana and the U.T. of Chandigarh. This Committee has already submitted a separate

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report on computerization. While the Central Govern has fixed

number of BPL families in the State, this number increases manifold

by the State adopting its own criteria.

Centre and State should

have the same criteria for identifying BPL families. PDS can succeed only if it is implemented on the basis of zero tolerance in every sphere.

PRELIMINARY

1. In Writ Petition(C) No.196/2001 – People’s Union for Civil Liberties V/S Union of India and Ors. Hon’ble Supreme Court of India by Order dated the 12.7.2006 constituted a Committee to be headed by me to look into maladies affecting the proper functioning of the Public Distribution System (PDS) and to suggest remedial measures. The operative portion of the order reads as under

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“After having heard learned counsel for the parties, we find that there is practically no monitoring over the sums allotted for the Public Distribution System (in short PDS) by the Central Government, and its utilization. The amount involved by the Central Government and its utilization. The amount involved we are told is in the neighborhood of Rupees Thirty Thousand Crores annually. Certain suggestions have been given by Mr. Colin Gonsalves, learned senior counsel as to the modalities to be adopted in such cases. At the present stage we feel it would be necessary to constitute a Central Vigilance Committee headed by a retired Judge of the Court to be assisted by Dr. M.C. Saxena, the Commissioner earlier appointed by this Court. We requested Mr. Justice D.P. Wadhwa to head the Committee.

The Committee shall look into the maladies which are affecting the proper functioning of the system and also suggest remedial measures. For this purpose the Committee shall amongst other things, focus on:-

  • a) The mode of appointment of the dealers,

  • b) The ideal commission or the rates payable to the dealers, and

  • c) Modalities as to how the Committees already in place, can function better,

  • d) Modes as to how there can be transparency in allotment of the food stocks to be sold at the shops.

While dealing with the question of the mode of appointment, the Committee shall also suggest as to a transparent mode in the selection of the dealers. The Committee shall also indicate as to how more effective action can be taken on the report of

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the Vigilance Committee already appointed. It goes without saying that the same shall be in addition to the legal remedies available to any citizen in setting law into motion. We request the Committee to give its report within period of four months so that further instructions/directions can be given.

The Committee would invite suggestions from general public, organizations and would consider the suggestions, if any received in the proper perspective. “

  • 2. Hon’ble Court’s direction was initially given for the Government of Delhi to be followed on an all India basis.

  • 3. Committee submitted report on Delhi on 21.8.2007.

  • 4. By order dated 10.1.2008, Hon’ble Court, while accepting the report, directed the Committee to do the similar exercise in terms of earlier for the entire country.

  • 5. Scope of the task assigned to the Committee thus having been enlarged, the Committee projected to the Department of Food & Public Distribution, additional requirements of staff, space and delegation of financial powers for its smooth functioning. The Department dilly dallied and did not meet the requirements. The Committee had to approach the Hon’ble Court again and again. It was only after a peremptory Order dated 25.8.2008 was passed by the Hon’ble Court that the Department started taking steps for creating necessary infrastructure. It was only thereafter that the Committee could start functioning in right earnest. The Hon’ble Court extended the time for submitting the report till April 2009.

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  • 6. The Committee submitted its report for the States of Uttarakhand, Jharkhand, Orissa and Karnataka. Thereafter, the Hon’ble Court has been pleased to extend the time further till December 2009. The Committee has since submitted the report on the State of Andhra Pradesh. The Committee is presently submitting its report on the State of Bihar

  • 7. The Committee has already submitted a separate comprehensive report on Computerization of PDS.

  • 8. No one has doubted the utility of PDS being the need for supply of food grains to the poor of the country at affordable rates. Procurement and distribution of food grains is a huge and gigantic task but then the whole system is built on corruption. There are more leakages and maladministration and benefits to the poor are low. Inefficiency and corruption has made PDS corrupt at several levels. (during the course of the visit of the Committee to various places it found that equally and perhaps more corrupt is the distribution of kerosene oil). The system lacks transparency, accountability, monitoring and enforcing. Survey is not being conducted regularly and properly with the result people Above Poverty Line (APL) have been issued Below Poverty Line (BPL) cards and those eligible for BPL cards have been ignored. There is menace of bogus cards and in the absence of ration cards the whole PDS system on the basis of coupons has fallen into disarray. Bogus cards are in abundance. Immediate measures are required to reduce the diversion of food grains. Delivery systems under the PDS have to be improved so that the real beneficiary gets its due entitlement at fixed price, fixed quantity, fixed time and wholesome quality. Innovative methods are required to improve the system. The whole system has to be totally

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revamped and modern technology answer.

would

appear

to

be

the only

  • 9. Committee has suggested that in order to combat corruption and strengthening

PDS

there

has

to

be

zero

tolerance approach.

Everything appears to be fine

on paper but its implementation is

faulty.

10. During its visit to State of Bihar, the Committee visited districts of Patna, Jahanabad, Bihar Sharif, Begusarai, Samastipur, Muzaffarpur. Apart from meeting officials of the State, BSFC, FCI, the Committee met across section of people. These included NGOs, FPS owners, Transporters, Godown keepers and beneficiaries. The Committee also inspected FPS, State Godowns and godowns of FCI. The Committee also visited the offices of Food & Consumer Production Department of BSFC.

  • 11. During its visit the Committee held discussions with the officers of the State Government, Bihar, State Civil Supplies Corporation (BSFC) and FCI. Committee interacted with NGOs, FPS owners and beneficiaries and held public meetings. Committee also inspected the godowns and the FPSs. Committee got full cooperation from the officials of the State Government, BSFC and the FCI. Committee records appreciation of the assistance rendered to the Committee by various officials of the State Government. In the first meeting the officers who participated are – Mr. R.J.M. Pilai. Chief Secreary, Mr. Deepak Kumar, Principal Secretary, Urban Development Department, Mr. Tripurari Sharan, Secretary, Food & Consumer Protection Department, Mr. K.P. Singh, Joint Secretary, Rural Development Department, Mr. R.K. Sinha, Special Officer Rationing Patna, Mr. Jai Shankar Prasad Yadav, Dy. Secretary, Food & Consumer Protection Deptt., Mr. Suresh

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Thakur, Dy. Secretary, Food & Consumer Protection Deptt., Mr. N.P Mandal, Secretary to Food Commissioner, Mr. Sushil Nagpal, General Manager, FCI Patna, Mr. S. K. Bhandari, DGM(FCI), Mr. P. Rohit, Assistant General Manager(FCI), Mr. Pradip Kumar, Managing Director, BSFC, Mr. R.N. Lal, Chief of Procurement, BSFC, Mr. D.N. Jha, Dy. Chief, BSFC,

Participants of the meetings held at various places are as under:-

Patna

Mr. Trupurari Sharan, Secretary, Food & Consumer Protetion Deptt, Mr. Jitender Kumar Sinha, Collector & Mr. R.K. Sinha , Special Officer, Rationing

Jahanabad

Mr.Sanjay Kumar Aggarwal, Collector, Mr. Om Prakash Rai, Additional Divisional Magistrate, Mr. Manu Maharaj, Superintendent of Police, Mr. Ravi Kumar Sinha, Manager, FCI, Mr. Manoj Kumar, Area Manager, FCI, Mr. Nirmal Kumar, Roy, District Manager BSFC.

Gaya

Mr. Sanjay Kumar Singh, Collector, Mr. Durgesh Nandan, ADM, Mr. Akhilesh Kumar, DSO, & Mr. Nirmal Kumar Roy, Distt. Manager, FCI

Bihar Sharif

Mr. Anupam Kumar, Collector, Mr. Jiut Singh, Sub Divisional Magistrate, Mr. Radhe Shyam Sah, Sub Divisional Magistrate, Mr. Arun Kumar Prasad, ADM, Mr. Rakesh Ranjan, District Supply Officer, Mr. Ram Roop Prasad, SDO, Mr. A Thakur, Area manager, FCI, Mr. R.K. Sinha, Manager(QC), Mr. K.B.P Srivastava, District Manager, BSFC, Mr. Anil Kumar, Accounts Officer, BSFC.

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Begusarai

Mr. Jitender Srivastav, Collector & DM. Mr. Ashok Kumar Summan, SDO, Mr. Suresh Thakur, Dy. Secy, Mr. Mohd. Hakizkhan, Addl. Collector, Mr. Ramesh Mishra, DDC Mr. Anil Kumar Singh, Dy. Chief of Audit. Mr. S.N.P Sinha, District Manager, BSFC, Mr. R.P. Mochi, Area Manager, FCI & Mr. T.S.Hemlovenn, Manager, FCI.

Samastipur

Mr. Asangba Chuba Aao, Collector, Mr. Uday Kumar, Dustrict Supply Officer, Mr. Subhas Chandra Jha, District Supply Officer, Mr. Suresh Thakur, Dy. Secretary, Food & Consumer Protection, Mr. Ram Prit Mochi, Area Manager, FCI, Mr. Ravi K. Sinha Manager, FCI Mr. Ajay Kumar Mitra, Dy. Chief Computer State, FCI Mr. Ashutosh Kumar, District Manager BSFC, Mr. Anil Kumar, Dy. Chief Officer, BSFC,

Muzaffarpur

Mr. Vipin Kumar, Collector, Dr. J.L. Sinha, Sub Divisional Magistrate, Mr. K. Kapoor, Sub Divisional Magistrate, Mr. Harishankar Prasad, District Supply Officer, Mr. Shanker Mehta, Additional District Supply Officer, Mr. Suresh Thakur, Dy. Secretary, Food & Consumer Protection Deptt , Mr. Jaiprakash Narayan, Block Supply Officer, Mr. Ajay Sharma, Marketing Officer, Mr. Rakesh Ranjan, Marketing Officer, Mr. Narul Hoda, Marketing Officer, Mr. Rambakil Pandy, District Manager, (FCI) Mr. N.P. Singh , Manager, FCI, Mr. A.K. Paswan, Area Manager, FCI, Mr. Ravi Kumar. Sinha, Manager (QC), FCI, Mr. Anil Kumar, Officer (Audit) BSFC.

12. The Committee also got assistance from the lawyers recommended by the Judges of the Patna High Court. The names of the lawyers are Ms. Guriya Nisha and Mr. Rajiv Roy.

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13. Members of the Committee who visited the State are Mr. Dinesh Dayal, Ms. Meenakshi Chauhan, Ms. Naomi Chandra and Mr. Shohit Chaudhry (being members of Legal Team), and Mr. J.K. Bhutani, Section Officer. Mr. Dayan Krishnan though could not visit the State collaborated in preparing the Final Report. Mr. S.C. Rawal, a former Registrar of Delhi High Court and appointed as Secretary by the Chairman, has been performing functions of the Secretary of the Committee.

14. The Committee is submitting its report which has been divided into various Chapters like Viability of FPS; Appointment of FPS dealers; Vigilance & Enforcement; mechanism, Wholesale and retail distribution of PDS food grains and Coupon system. Overview has been given of the PDS in the State and recommendations made. An attempt has been made to make each Chapter self-contained and there is possibly a repetition at various places.

Delhi August 2009

(Justice D.P Wadhwa) Chairman Central Vigilance committee on Public Distribution System

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FINAL REPORT

Chapter 1 INTRODUCTION

Public Distribution System in Bihar

1.1 Total population of Bihar State 1 is 8,28,78,796. There are 38
1.1
Total
population
of
Bihar
State 1
is
8,28,78,796.
There
are
38

Districts, 101 Subdivisions, 536 Blocks in State. State has 45,103

Revenue villages and 8471 Panchayats.

  • 1.2 The Central Vigilance Committee on PDS visited the State of Bihar and covered the areas of Patna, Jahanabad, Gaya, Begusarai, Samastipur and Muzaffarpur districts of the State. As per the

1 http://gov.bih.nic.in/Profile/default.htm

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Planning Commission 65 lakh (6.5 million) families in Bihar have been declared Below Poverty Line. State Government has identified 1.23 crores BPL families. Thus, there is big difference in the data of Planning Commission and that of the State Government with regard to the number of people living below poverty line.

  • 1.3 The Government of Bihar revised the constituents of food grain under the Public Distribution System and slashed the quota of foodgrain for BPL families from 35 kg. per family to 25 kg. per family. The Bihar Government claims that the members per family in the State are 4.38. 2 The Government of India is allocating food grains for the BPL families as per the Planning Commission data. However the State has distributed the coupons as per its own 2007 survey of BPL which has resulted in an increased number of BPL families. Hence it is difficult for the State to distribute the food grains to all the BPL beneficiaries. As a result the government of Bihar has reduced the entitlement per family from 35 kg. to 25 kg. per month. This reduction has been justified by the State Government in view of the fact that the average family size in the State has also come down from 6.16 to 4.31.

  • 1.4 In the beginning of 2007, all ration cards of the TPDS beneficiaries were cancelled for the purpose of introducing new ration cards in the State on the basis of a fresh survey. Thus presently there are no ration cards in the State of Bihar and ration is distributed only on the basis of coupons. The Committee was informed that the new list as per 2007 survey, has name of the head of the family only. The task of preparation of the new list is time consuming as the

2 Indian Express dated 29 th march 2008,

xxiii

administration is incorporating the names of all the family members in the data. It was further informed that there are 57 lakhs objections against the 2007 survey list which are also being looked into. Hence, the ration presently is distributed only on the basis of coupons, i.e., the beneficiaries have to submit their coupons and pay money to the FPS dealers to lift their ration.

  • 1.5 In the State, wheat is being distributed at the rate of Rs.4.96 per kg. and rice at the rate of Rs.6.52 per kg. to BPL beneficiaries who are entitled to get 10 kg wheat and 15 kg rice per family. Similarly AAY beneficiaries are entitled to get 10 Kg. wheat at the rate of Rs. 2 per Kg. and 15 kg. rice at the rate of Rs.3 per Kg.

  • 1.6 Prior to 2008 the entitlement of grain to the various categories of beneficiaries was as under:

 

Before

After 2008

Difference

2008

BPL

Rice

25 kg.

15 kg.

(- 10)

Wheat

10 kg.

10 kg.

AAY

Rice

21 kg.

15 kg.

(-6)

Wheat

14 kg.

10 kg.

(-4)

APL

Distributed in Urban areas on occasions like festivals

etc.

  • 1.7 The State has one more category of beneficiaries called ‘Special AAY’. Ration entitlement of AAY beneficiaries was reduced from 35 kg to 25 kg and the balance stock is distributed to the Special AAY. This category has been created out of the BPL category itself. Rice is available for distribution to this category but there is shortage of wheat as the distribution of allocation of wheat is same as earlier, i.e. 10 kg.

  • 1.8 The present Report looks into the PDS in Bihar with special focus on the Legal Regime, Distribution

of

foodgrain

in

the

State,

xxiv

Transportation, Mode of appointment of FPS dealers, Viability of FPS, BPL identification, Coupon system in the State, Vigilance and Enforcement, Computerization and Recommendations of the Committee.

xxv

Chapter 2 LEGAL REGIME

2.1 Entities involved in the Public Distribution System in Bihar

The various entities involved for distribution beneficiaries in Bihar are as follows:

of PDS foodgrain

to

the

2.1.1 Food Corporation of India (FCI): FCI was set up under the Food Corporation Act, 1964, inter alia for the purpose of distribution of food grains throughout the country under the Public Distribution System. The FCI is responsible for making food grains available to the State Governments in terms of the allocations fixed by the Central Government. Presently there are 54 godowns of FCI in the State of Bihar having total storage capacity of 575,006 MT. The food grain is transported from FCI to the State godowns through transport contractors engaged by BSFC.

2.1.2 Bihar State Food & Civil Supplies Corporation Ltd. (BSFC):

BSFC is a government undertaking responsible for procurement, lifting and distribution of food grain under the Public Distribution System and for implementing other schemes. The Corporation operates through 25 field units in Bihar known as BSFC Districts. The apex body of the Corporation is the Board of Directors. At present the Corporation is headed by the Managing Director. The Managing Director acts as the Chief Executive officer of the Corporation and is assisted by various functional chiefs who are in charge of particular sections such as Administration, Procurement & Distribution, Finance and Accounts, Audit & Budget. There is also a provision for Company Secretary. At the District level, the organisation is headed by the District Manager. There are 351 godowns throughout the State. These godowns are managed by Assistant Godown Managers (AGM). 3

3 Material supplied by the BSFC at Patna on 14 th July 2009, at pg.1.

xxvi

2.1.3 Fair Priced Shop (FPS):

Fair Price shops are the final link in the

chain of distribution of food grain to the beneficiaries. The State of Bihar is divided into 38 districts and there are 44,480 FPSs in the State. The FPS dealers have to lift the food grain from the BSFC godowns by arranging their own transport for which the State reimburses the dealers at the rate of Rs.4/-per quintal of grain.

  • 2.2 Statutory Framework

2.2.1 Essential Commodities Act, 1955: The Essential Commodities Act is an Act to control the production, supply and distribution of certain commodities in the interest of general public. The Act also regulates trade and commerce pertaining to such commodities.

  • i. Section 3 of the Act confers powers on the Central Government to control production, supply, and distribution etc. of essential commodities. Central Government has issued an order called Public Distribution System (Control) Order 2001 (Order), which was amended in 2004.

ii.

Stringent

provisions

exist in

the Act

and the Control

Order,

to

deal with any infringement of the provisions of the Act or the Order.

iii.

Section 6A provides for confiscation of any essential commodity in pursuance of Section 3 of the Order without unreasonable delay. The section provides that if the Collector is of the opinion that it is expedient to do so, he may direct the commodity to be seized and be produced for inspection before him and if he is satisfied then he may order the confiscation of the commodity so seized.

iv. Section 7 provides for penalties. Any person contravening the Order is liable to be sentenced to imprisonment, which may extend

xxvii

up to 7 years and shall also be liable to fine. The sentence of imprisonment cannot be less than 3 months unless there are adequate and special reasons. The property in respect of which contravention of the Order has taken place, is liable to be forfeited to the Government and so also any vehicle used in carrying such commodity. If a person commits offence for the second time, then imprisonment cannot be for less than 6 months subject to adequate and special reasons.

  • v. A person who attempts to contravene or abets any contravention of the Control Order is similarly liable (Section 8).

vi.

Section 9 provides for punishment up to 5 years or fine or both, if the record is not maintained in terms of the Control Order or any statement or information furnished, which is not true.

vii. Section 10 deals with offences by Companies.

viii.

Section 10A has made any offence punishable under the Act cognizable.

ix. Section 10C provides that Court may presume the existence of such mental state where an offence under the Act requires culpable mental state on the part of the accused. “Culpable mental state” includes intention, motive, knowledge or reason to believe a fact.

  • x. Under Section

11,

a Court

can take cognizance of an offence

under the Act not only on a complaint made by a public servant but

also

by

any

person

aggrieved

or

any

recognized

consumer

organization.

 

xi.

An offence for contravention of the Control Order is to be tried summarily (Section 12A).

xxviii

xii.

If an accused is sentenced to imprisonment

for

a period

not

exceeding one month and a fine not exceeding Rupees two

thousand, no appeal can be filed.

xiii.

Section 14 provides

that when

a

person

is

prosecuted for

contravention of any order which prohibits him from doing any act or being in possession of a thing without lawful authority or without a permit, or other document, the burden of proving that he has such an authority, permit, licence or other document, shall be on him.

  • 2.2.2 The Public Distribution System (Control) Order, 2001: The Public Distribution System (Control) Order, 2001 (hereinafter referred to as the ‘PDS Order 2001’) has been issued by the Central Government in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955 for maintaining supplies and securing availability and distribution of essential commodities under the Public Distribution System. The said Order has been amended in
    2004.

  • 2.2.3 The Public Distribution System (Control) Order, Notification dated 15.02.2007 (2007 Notification) : The 2007 Notification has been issued by the government of Bihar in pursuance of the PDS (Control) Order 2001 in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955, in connection with the functioning of the FPS as to issuance of licence, suspension/cancellation, terms and conditions and regulating the sale and distribution of the essential commodities. Some of the important provisions of the Notification are as under:

    • 1. Clause 2

pertains to the constitution of a Selection

Committee

for issuing licence to FPS dealers. As per the provision, the

constitution of the Selection Committee is as under:

xxix

Chairman - The District Magistrate

Secretary – The Special Officer Rationing for Rationing Area, Patna, ADM (Supply) Patna for Patna district and for the remaining districts, the District Supply Officer/ In charge District Supply Officer (DSO) Members – (i) The Sub Divisional Officer of Respective Sub Division (SDO)

(ii)

Any schedule caste/ schedule tribe officer

(iii)

posted in District. The District Co-operative Officer

  • 2. As per the 2007 Notification, the reservation in allotment of FPS shall be applicable as follows:

Scheduled Caste

16 %

Scheduled Tribe

1 %

Most Backward Class

18 %

Backward Class

12 %

Woman Backward Class

3 %

The reservation criteria shall be applicable at the Sub Divisional Level

  • 3. The following people and institutions shall be given priority in allotment of FPS, excluding compassionate cases:

    • (a) Self Help Group

    • (b) Gram Panchayat

    • (c) Co-operative Society

    • (d) Women/ Co-operative Society

    • (e) Handicapped

    • (f) Educated unemployed

    • (g) Preference should be given to the applicant who is resident of concerned Panchayat or ward.

  • 4. Compassionate Cases: On priority basis wife/husband, son, unmarried daughter, daughter in law, widow of deceased son would be allotted shops. Exclusion Norms:

    • (i) Shops shall not be allotted to more than one member of the joint family

  • xxx

    (ii)

    Elected Mukhiya, M.L.A, M.P., Member of Municipal

    (iii)

    Corporation and Municipality till their tenure Flour Mill owners

    (iv)

    Minor, Lunatic or person of unsound mind and un-discharged

    (v)

    insolvent Applicant shall not be given licence if he/she is finally

    (vi)

    convicted under Essential Commodities Act, 1955 If the applicant holds the post of profit in the Government.

    • 5. Renewal of Licence: Once allotted, the licence shall be renewed by the Licensing Authority every 5 years on payment of Rs.400/- by the dealer.

    • 6. Duties and Responsibilities of FPS dealer: Clause 5 lays down the following duties of FPS dealers – (1)

    Sale of essential commodities as per entitlement of

    beneficiaries at the retail price fixed by the Food Supply & Civil Supplies Department, Bihar under the PDS. (2) Display of information on a notice board at a prominent place in the shop on daily basis regarding (a) List of BPL, Antyodaya and Annapurna beneficiaries, (b) entitlement of essential commodities, (c) scale of issue, (d) retail issue prices, (e) timings of opening and closing of the FPS (f) stocks of essential commodities received during the month (g) opening and closing stock of essential commodities and (h) the authority for redressal of grievance/lodging complaints with respect to quality and quantity of essential commodities under the PDS. (3) Maintenance of records of beneficiaries, stock register, issue and sale register, (4) Furnishing of copies of specified documents, namely, ration card register, stock register, sale register to the Inspecting Authority Block Supply Officer or as directed by Licensing Authority. (5) Display of samples of food grains being supplied through the FPS. (6) Production of books and records relating to the allotment and distribution of essential commodities to the inspecting authority and furnishing of such information as may be called for by the inspecting or licensing authority.

    xxxi

    (7) Accounting of the actual distribution of essential commodities and furnishing the balance stock at the end of the month to the Block Supply Officer or as directed by Licensing Authority (8) Opening and closing of the FPS as per the prescribed timings displayed on the notice board.

    • 7. Working Hours: Clause 6 of the Notification lays down the working period and holiday for FPS. The FPS dealers are allowed only gazetted holidays and weekly holiday (Monday) to close their shops. The FPS shall remain open between 7 am to 1 pm during the month of March to August and from 8 am to 2 pm during September to February.

    • 8. Appeal: Clause 15 provides for Appeal against the Order of the Licensing Authority denying the issuance or renewal of licence or of Cancellation of the licence. The Appellate authority is as notified under the PDS (Control) Order 2001.

    2.2.4 Vide letter dated 26.02.2001, instructions have been

    given with

    regard to strict vigilance on the functioning of the FPS and the inspection thereof. Instructions have been laid down with regard to regular weekly inspection of the FPS. Specific period has been prescribed within which the concerned official have to inspect the FPS in the area under their jurisdiction. As per the said letter, at least 10% of FPS in a particular area has to be test checked at least once a month.

    2.2.5 Vide Letter No. Q -16025/4/2002 – AI (RD) dated 13.09.2002 Government of India directed the Government of Bihar to conduct a fresh survey by adopting a normative approach for identification of the rural poor by introducing a “Score Based, Ranking based” on relative deprivations revealed by certain Socio-economic indicators in contrast to the ‘income and expenditure’ approach adopted in the BPL Census 1992 and 1997 respectively. The State government was given the flexibility to decide the cut-off scores for identifying and sub-categorisation of the households into various Groups. The cut

    xxxii

    off scores may be uniform or could be varying within a State depending on the ground realties of the State. Detailed guidelines for conducting the BPL survey were also provided.

    2.2.6 Vide Letter 22.10.2005 the government of Bihar laid down guidelines for dealing with the problem of black marketing and diversion of food grain. The concerned officials have been directed initiate proceedings under the Prevention of Black marketing and Maintenance of Supplies of Essential Commodities Act, 1980, against those indulging in black marketing and diversion of grain.

    2.2.7 Letter

    No.13/05-797

    dated

    04.03.2006

    prescribes

    for

    a

    strict

    implementation

    of

    all

    previous

    Orders

    with

    regard

    to

    black

    marketing and diversion. Some important instructions as laid down

    in the letter are as follows :

    (i)

    The District Magistrate is responsible for ensuring proper vigilance of the transportation and distribution of grain which is to be done under the supervision of the concerned supervising official who has to keep the DM informed of

    details like the quantity of grain supplied, the truck number in

    which the transportation takes

    place,

    the

    name

    of

    the

    transporter /driver etc. These details have to be maintained in

    a register. This register has to be jointly

    signed by

    the

    (ii)

    supervising officer and the Lifting Incharge. The above mentioned register has to be reviewed

    at least

    (iii)

    once a month by the DSO. The DM has to review the same once in every two months. The abovementioned register has to be regularly compared

    with the registers at BSFC.

    Legal action is to be initiated

    against officials if the accounts/records at the FCI and BSFC do not tally.

    (iv)

    The unloading of grain at the BSFC will be done only in the presence of the supervising officer.

    (v)

    After duly checking the quality of the grain, joint sampling of the same will be done by the Assistant Godown Manager and the FPS dealer, both of whom will sign the sample.

    xxxiii

    (vi) Registers has to be maintained with regard to allocation and distribution of grain by the FPS dealer. The dealer will be prosecuted under the Essential Commodities Act if he is found to be cheating in accounts/distribution. (vii) The DSO and the SDO are responsible for supervising the distribution, movement, unloading of grain. Under no circumstances will the grain be unloaded in the absence of

    (viii)

    the supervising officer. The unloading of grain at the FPS has to be certified by at least 3 members of the Vigilance Committee. The Marketing Officer is responsible for ensuring that this exercise is done and also has to record the same in the Stock Register.

    (ix) The SDO is responsible for allocation of grain to the FPS dealer. The same is supervised by the Marketing Officer who allocates food grain on the basis of the coupons received by the dealer in the previous month.

    • (x) In case any instance of black marketing comes to light, the concerned members of the Vigilance Committee, Marketing Officer or other such officials will be prosecuted under the Essential Commodities Act.

    2.2.8 Vide letter dated 22.08.2006 the State proposed the introduction of the coupon system for the distribution of foodgrains and kerosene in the rural areas for BPL and AAY beneficiaries.

    2.2.9 Letter No. 4025 dated 07.11.2007 provides for strict compliance with the provision of Joint Sampling of food grain by a representative of FCI, a representative of State and a representative of District Administration. It was instructed that at the time of lifting of grain from FCI the abovementioned representatives will ensure that only if the quality of grain is good, is it lifted from the FCI. A

    xxxiv

    sample of the grain is to be kept by the District Administration and one by the Sub Divisional Officer. The letter further provides that the same exercise be done at the time of lifting of stock from the BSFC.

    • 2.2.10 Letter No. Misc.35/2008 -1882 dated 09.04.2008 makes the

    SDO directly and personally responsible for the proper functioning of

    the coupon system, distribution of grain and black marketing and diversion of essential commodities.

    • 2.2.11 Vide Letter No. Misc.-22/06 (Block) dated 28.04.2008, the

    government of Bihar laid down that in view of the results of the BPL

    survey conducted in the State, after which the number of BPL families increased considerably, the total entitlement of grain for such families was decreased from 35 kg. to 25 kg. per family. This was in view of the facts that the government was not receiving additional allotment of grain from the Centre, in accordance with the new list of BPL families. The same letter also provided for the category of ‘Special Antyodaya Families’.

    • 2.2.12 Vide letter No.77/01-2261 dated 06.05.2008 the government

    issued instructions with regard to re-constitution of Monitoring Committees at the Sub Division level. As per this letter, the Monitoring Committees at the Sub Division level are to consist of the following members :

    i.

    Sub Divisional Officer

     

    Chairman

    ii.

    District Supply Officer

     

    Member

     

    Secretary

    iii.

    All

    recognised

    representatives

    of

    Members

    recognised political parties

     

    iv.

    All Zila Parishad members under the Sub

    Member

    Division

    v.

    President of the Local Body

     

    Member

    vi.

    Representative nominated by the Local

    Member

    xxxv

     

    MLA and M.P.

    vii.

    Chief of Panchayat Samities of Blocks

    under the Sub division

    viii.

    Representative of oil companies

    Member

    ix.

    10 members nominated by the State government including minorities, SC/ST, backward class and women. One

    Member

    representing each category.

    • 2.2.13 Letter No. 77/2001 dated nil is with regard to the constitution of Panchayat Level Vigilance Committees as under :

    Panchayat Level Vigilance Committees

    i.

    Panchayat Mukhiya

     

    Co-ordinator

    ii.

    Panchayat Sarpanch

     

    Member

    iii.

    Person

    defeated

    by

    closest

    Member

    margin

    in

    the

    Mukhiya

    elections.

    iv.

    Person

    defeated

    by

    closest

    Member

    margin

    in

    the

    Sarpanch

    elections.

    v.

    Ward

    members

    of

    the

    area

    Member

    under which the concerned

    FPS is covered.

     

    vi.

    Representatives of recognised political parties nominated by Block/ District President/

    Member

    Secretary

     

    vii.

    In the absence of the Mukhiya, the Sub Co-ordinator Mukhiya

     

    will head the Committee

     
    • 2.2.14 The abovementioned Letter No.77/2001 also lays down the

    functions of the Panchayat Level Vigilance Committee which include keeping a vigil on the lifting and distribution of food grain by the FPS dealers, to ensure that the beneficiaries get the correct quantity of food grain as per their entitlement, and to ensure that the FPS dealers inform the coordinator of the Committee about the lifting and distribution of grain.

    xxxvi

    2.2.15

    Vide letter No. 13/05-3026 dated 05.06.2008 the government

    of Bihar has provided for a Monthly Certification of lifting and distribution of essential commodities by the FPS dealers. This step has been taken to increase transparency in the process of lifting and distribution of essential commodities. At the rural level the Certification is to be done by the Panchayat Level Vigilance Committees and at the urban level it is to be done by Urban local bodies. It has been made mandatory for the FPS dealer to submit the Certificate every month at the concerned office.

    • 2.2.16 Letter No.77/2001 – 4400 dated 14.08.2008 provides for

    constitution of Vigilance Committees at the Ward level as under:

    i.

    Ward Member

     

    Co-ordinator

    ii.

    Ward

    members

    of

    the area

    Member

    under which the concerned FPS

    is covered.

     

    iii.

    One representative each of all recognised political parties who have been nominated by the President / Secretary of the

    Member

    district/block/urban local body

    • 2.2.17 Letter No.BPL-03/08 – 4413 dated 19.08.2008 lays down that

    the FPS dealers should deposit the Demand Drafts for lifting the foodgrains by the 25 th of the previous month. The bank Drafts have to be deposited at the BSFC.

    • 2.3 Orders Passed by the Hon’ble Supreme Court in W.P. (C) NO. 196/2001.

    2.3.1 The Hon’ble Supreme Court by the Order dated 02.05.2003 directed as follows:

    • A. That the licences of those fair price shop owners who do not keep their shops open throughout the month during the stipulated period, fail to provide grain to BPL families strictly at BPL rates, keep the cards of BPL households with them, make false entries in the BPL cards, engage in black-marketing or siphoning away of grains to the

    xxxvii

    open market

    and

    hand

    over

    such

    ration

    shops

    to

    other

    person/organizations, will be liable to be cancelled.

    • B. The Government of India was directed to place the under mentioned classes of persons in the AAY category:

    i.

    Aged, infirm, disabled, destitute men and women, pregnant and lactating women,

    ii.

    Widows

    and

    other

    single

    women

    with

    no

    regular

    support,

     

    iii.

    Old persons (aged 60 years above) with no regular

    support and no assured means of support,

     

    iv.

    Households with a disabled adult and not assured

    means

    of subsistence,

     

    v.

    Households where due to old age, lack of physical or

    mental fitness, social customs, need to care for a disabled, or other persons no adult member is

    available

    to engage in gainful employment outside the

    vi.

    house. Primitive tribes

    2.3.2 The Hon’ble Supreme Court by its order dated 8.5.2002 has fixed the responsibility on the District Collector for implementation of the orders of this Court and further directed that the Chief Secretary will ensure compliance with the order of this Court.

    Chapter 3 DISTRIBUTION OF FOODGRAIN

    3.1 Introduction

    Public Distribution System is operated under the joint responsibility of the Central and the State Governments. The Central Government has taken the responsibility for procurement, storage, transportation and

    xxxviii

    bulk allocation of foodgrains to State and Union Territories (UT) and maintenance of buffer stock. State and UT Governments are responsible for identification of AAY and BPL families; issuance of ration cards to eligible families; storage in State/UT godowns; licensing and supervision over Fair Price Shops; distribution of ration to ration card holders through FPS and eliminating leakages/ghost cards etc. The Present chapter deals with the distribution of foodgrains in the State of Bihar from the FCI godowns to the State Godown, from State godowns to FPS and from FPS to the beneficiaries of the scheme.

    • 3.2 Entities involved

    1. Food Corporation of India (FCI):

    Presently there are 54 godowns of

    FCI in the State of Bihar having total storage capacity of 575,006

    MT. Acute storage crisis was being felt and the matter was appraised to the FCI Head quarters and Ministry for augmenting capacity. A High level Committee has now given approval for Construction of 3 lakh MT covered capacity at different locations through Public Private Partnership. After Construction of the additional storage capacity there will be no shortage of space with the FCI for PDS as well as procurement purposes.

    • 2. Bihar State Food and Civil Supplies Corporation (BSFC): Bihar State Food and Civil Supplies Corporation (BSFC), established in 1973, acts as the agent of the State Government of Bihar in matters of procurement, transportation and handling, storage and distribution of food grains to FPS dealers and other Government agencies. The apex body of the Corporation is the Board of Directors. The Corporation is at present headed by Managing Director (MD). The MD acts as Chief Executive Officer of the Corporation and is assisted by various functional chiefs who are incharge of particular sections like Administration, Procurement and Distribution, Finance and Accounts, Audit and Budget etc. The Chief of Procurement is responsible to ensure procurement and distribution of foodgrains under various schemes sponsored by Central Government. He keeps liaisons with State Government and Food Corporation of India to ensure availability of foodgrains against allocation of the State under various welfare schemes. There are 351 BSFC godowns having a total capacity of 97241 MT catering to the 536 blocks in Bihar.

    xxxix

    Hierarchy at District office of the BSFC District Manager

    Assistant Godown Manager (AGM)

    Accounts Officer

    3. Department of Food and Civil Supplies Bihar.

    • A. Hierarchy of department

    In Patna

    District Magistrate / Collector

    Special Officer rationing and ADM

    ADM Supply & ADM Rationing

    DRO (Departmental Rationing Officer)

    ARO (Assistant

    Rationing Officer)

    MO (Marketing Officer)

    Supply Inspector (Supply Inspector)

    In rest of the districts

    Deputy Director Food, at Commissioner Level

    District Supply Officer (DSO) at District Level

    Additional District Supply Officer (ADSO) at Sub-divisional level

    Marketing Officer (MO)/ Block Supply officer (BSO) (Ward Level/ Block Level)

    Supply Inspector (Supply Inspector)

    xl

    • B. Role and responsibilities

    1.

    The Supply Inspector (SI) is the lowest level officer of the Department. He has to inspect Fair Price Shops and has to monitor distribution of ration by FPS dealers. SI is, therefore, supposed to be aware of the ground realities pertaining to the functioning of Fair Price shops.

    2. Marketing Officer / BSO allocates ration to each FPS. He collects Bank drafts from the FPS dealers for preparation of Store Issue Order (SIO). He has to monitor distribution of foodgrain by FPS dealers. Either the MO or Supply Inspector has to be present at the BSFC godown to monitor the lifting of grain by the FPS dealers. The District Magistrate can depute any other officer at the godown for this purpose. Thus, it is not necessary for every MO to be present at the BSFC godown when an FPS dealer of his area goes to godown to lift the foodgrain. 4 It is pertinent to mention here that many MO’s took the plea of being present at BSFC godown during lifting of grains, for the inefficiencies found in their work.

    3. DSO has to supervise the distribution of PDS foodgrain in his district. It was brought to the notice of this Committee that there is shortage of staff in the Department of Food and Civil Supplies, Bihar. There are 38 districts in the State and hence there should be 38 DSOs. There are only 15-16 DSOs in the state. 5

    4. The officers

    of the Department complained that in absence of

    proper staff they could not perform their functions properly. They

    4 Meeting with Dy. Secretary Food, Mr. Jai Shankar Prasad Yadav at office of CVC on 30 th July 09. 5 Meeting with DSO, Gaya

    xli

    also complained that they were not having required infrastructure like telephone, computer and fund for running the office, vehicle or conveyance allowance etc.

    • 3.3 Process of Allocation and lifting in the State

    The distribution system comprises three phases:

    • 1. From FCI to BSFC

    • 2. From BSFC to FPS dealers

    • 3. From FPS Dealers to beneficiaries.

    • 3.4 Distribution of foodgrain from FCI to BSFC

    3.4.1 The Central Government allocates food-grain to the States which is lifted from FCI. The Food Secretary of the State decides the district wise allocation of food-grain, a copy of which is given to the FCI. Thereafter, the district administration does the allocation block wise and gives a copy to the BSFC. BSFC then lifts the authorised allocation from the FCI. Depending upon the funds with the BSFC the District Manager sends advance requisition to the FCI with Bank Drafts. FCI then issues release orders and sends a copy to the BSFC. District Manager, BSFC then decides godown wise allotment on the basis of quantity mentioned in the Release Orders. The AGM of BSFC is responsible to supervise the lifting of the stock from FCI. He is responsible for loading the grain on the truck belonging to the transporting contractor appointed by the BSFC. The question is if the same quantity of foodgrain which is lifted from FCI by BSFC reaches the godown of BSFC. The fact is that when requisition in a duly filled form is sent by BSFC to FCI a Release Order is issued by FCI. Relevant details are mentioned in the Release Order giving the name of the godown, the commodity, the quantity, the amount, DD number and the date, whereafter foodgrain is lifted by BSFC in the presence of the FCI officials after duly weighing the quantity of foodgrain in the truck. The food grain is transported in the truck which is weighed twice, once when the empty truck enters the godown of the FCI, and again after the foodgrain is loaded in the truck. FCI official who is incharge of the shed from which foodgrain is loaded on the truck issues a Gate Pass for the truck after loading foodgrains in it. Once truck leaves the FCI godown, it is the responsibility of the BSFC to transport the foodgrains to godown. Committee observed that no BSFC official accompanies the truck from FCI to BSFC godown. FCI also fills Movement Form for every Release Order and gives a copy to BSFC. Movement form is duly signed by BSFC official who supervise the lifting of stock at FCI.

    xlii

    • 3.4.2 The time period for lifting the foodgrain by BSFC from FCI is 50 days. The stock of a month can be lifted by the BSFC by the 20 th day of the next month. Thus stock for the month of July can be lifted by the BSFC by the 20 th day of August. District manager shall ensure timely deposit of Bank Drafts against allocations and has to take all necessary steps to obtain Release Order (R.O) from FCI within stipulated time so that foodgrain be lifted timely from FCI.

    • 3.4.3 The representative of BSFC present at FCI godown should submit the dispatch report regarding dispatch of foodgrain from FCI on the same day to the District Manager. The District Manager has to ensure the receipt of arrival report within 24 hours from the date of dispatch. He is responsible to review the Central R.O register to ensure that register remains updated. He is duty bound to be vigilant on the functioning of the BSFC godowns and is responsible for any lapses on the part of AGM. It is pertinent to mention that transportation of foodgrain from FCI to BSFC is responsibility of the BSFC. The trucks of transporters appointed through tenders or otherwise hired by BSFC transport the foodgrain from FCI godown to BSFC godowns.

      • 3.5 Distribution of foodgrain from BSFC to FPS Dealers

        • 3.5.1 The bank drafts for purchase of commodities by the FPS dealers reach to District Manager (BSFC) through District Administration (Food and Supply Department). District Manager, BSFC prepares Store Issue Order (SIO). District Manager has to ensure that SIOs are prepared within twenty four hours from the date of receipt of bank drafts in the office except for holidays. Before signing the SIO’s all SIO’s must be checked by an assistant or assistant accountant or accountant whosoever is available. DM (BSFC) or in his absence Accounts officer signs the SIO’s. This authority can not

    xliii

    be delegated to others. Copy for FPS Dealers is sent to district administration and godown copy is sent to the concerned Godowns after obtaining proper receipt from AGM.

    • 3.5.2 The FPS owner has to deposit the Bank draft at the office

    of

    Marketing Officer / Block Supply Officer of the Department of Food and Supplies by the 25 th of the previous month. The Marketing

    Officer of the Department maintains records and is the custodian of all records at the Block level pertaining to FPS, he allocates the ration FPS wise, prepares a list of all the FPS dealers who

    deposited bank drafts

    and sends

    it

    to the District Manager’s

    (BSFC) office for issuance of Store Issue Order

    (SIO). He is also

    duty bound to be present at the BSFC godown at the time of lifting

    of the grain by FPS.

    • 3.5.3 The grain is transported from BSFC godowns to FPS in the vehicle hired by the FPS and it is the responsibility of the FPS dealer to transport the same. Dealers in the State gets Rs.4/- per quintal as the transportation commission. Delivery to door step of Fair Price Shops will reduce the chances of diversion as well as increase the viability of FPS. It is submitted that the committee in the Delhi report has stated that, it is the State’s obligation under the PDS Control Order, 2001 to ensure door step delivery. Clause 6(3) read with para 4(6) of the Annexure to PDS (Control) order 2001, casts a duty on the authorities to ensure physical deliveries of PDS Commodity to the FPS. Further, in the 9-point action plan formulated jointly by the Government of India and State/UT Governments, door step delivery of PDS commodities to the FPS has been pointed as one of the measures to prevent Diversion. In the light of this obligation it would be appropriate for the State Government to ensure delivery of PDS grain at the FPS Shop which would result in

    xliv

    reducing their expense on transportation and handling and help in curbing diversion.

    3.5.4 The Committee visited FCI godowns, BSFC godowns, Fair Price shops in different districts of State, met beneficiaries in different areas and also in public hearings conducted by the Committee. Committee also visited offices of ADSOs, Marketing officer/ Block Supply Officer’s office and found many irregularities in the process of allocation and distribution of foodgrain to beneficiaries.

    • 3.6 Irregularities found during allocation and lifting of foodgrain from FCI to BSFC godown and from BSFC godown to FPS

    3.6.1.Storage of foodgrains:

    There is acute shortage of storage space with BSFC. There are 351 BSFC godowns having total capacity of 97,241 MT catering to the 536 blocks in the State of Bihar. Godowns are usually very small having 100 MT capacity. However at some places godowns have capacity of 500 MT, 1000 MT and 2000 MT. The BSFC is not managing the godowns properly and is not following the standards of storage system. The poor condition of BSFC godowns shows that higher officials are not supervising the functioning of godowns properly. The BSFC godowns have no electric connections. The delayed allocation, improper maintenance of records, improper storage and transportation system of BSFC clearly show mismanagement and lack of Administration. For instance, the Committee found that there was no electricity or phone line available at the BSFC Godown, Rajbansi Nagar, Patna. The surroundings of the Godown were unhygienic. There was a foul

    smell emanating from both around and inside the godown. Upon enquiry, it was stated by the Godown In charge that a tender had been issued for the purposes of creating a sewage drain but no

    progress

    had been made

    till

    date. Further,

    there were no

    stack

    boards at the Godown and the gunnies were stacked right next to the wall. It was observed that various parts of the wall were damp. There were also various insects present on and around the grain bags.

    3.6.2.Weighment of foodgrains at Godowns:

    xlv

    a. The FCI godown at Dighaghat, Patna has a computerized weighbridge having a capacity of 20 MT. The Committee studied the functioning of computerized weighbridge. Initially, the weighbridge is checked for accuracy, for which a zero weight memo is printed. Then the empty truck is weighed at the weighbridge and the first print out pertaining to the truck is taken. This print out contains the truck number and the weight of the empty truck. A serial number is also given to this first printout. Thereafter, the truck goes for loading, which takes about one hour. The truck comes back at the weigh bridge for final weighment. The operator refers to the serial number of the first printout pertaining to the truck, manually feeds the truck number and takes out the final print of the Weight Check Memo (WCM). At the time of feeding the truck number, the operator also looks at the Gate Pass on which the number of bags being carried out by the truck is hand written. The operator tallies the net weight of the truck, by subtracting the weight of empty gunny bags. The operator informed the Committee that only one print out of the WCM is taken out and the same is kept at the FCI itself and no copy of the WCM is sent out to the BSFC godown with the truck. The Weight Check Memo is also not signed by the official of BSFC present at the FCI godown. The Committee observed that only one copy of weight check memo is printed which is kept at the FCI itself. Thus, no weight check memos were sent along with the trucks transporting the grain to the BSFC. The hired godowns of FCI do not have electronic weigh bridges. The FCI godown at ARDC, Begusarai town is a hired Godown having two sheds and storage capacity of 5000 M.T. It caters to the BSFC godowns at Khagaria and Begusarai. There was no electronic weighbridge at the godown and there was only a beam weight which could weigh a maximum of 50 Kgs at one time. It was stated that there was 100% weighment at the godown. The Committee did

    xlvi

    not find anything worth noticing about FCI except to say that FCI should have electronic weigh bridge and give WCM to the official of BSFC accompanying truck.

    • b. None of the BSFC godowns in the State have electronic weighment systems, and are using manual weighing balances. The godowns store food grains for all the subsidized schemes for poverty alleviation and receive huge quantity of food grains monthly from the FCI. The Weighing machines are not sufficient to weigh the huge quantity of grains which reaches the godowns from the FCI godown. As manual weighing of huge quantity is obviously not possible in the absence of electronic weighing system clearly shows that food grains are not weighed at all when it reaches the BSFC godown or when it is supplied to the FPS dealers. The Absence of weighbridges makes the scheme vulnerable to malpractices. Thus, there should be electronic weighing systems at the BSFC godowns and all records should be computerized. Weight check memos should also be issued automatically through the computerized system. At BSFC godown of Rajbansi Nagar, Patna the stock is weighed on beam scale with wooden planks which can weigh up to 2 gunny bags at a time. There was no space to erect the weighing scale and it was lying folded at one side. The AGM stated that when stock is to be lifted by FPS, the AGM opens and arrange the weighing system to weigh grain. The Committee is of the view that there should be electronic weighment system in each godown and weight check memo should be electronically generated and the system of making manual weigh check memo should be done away with at each godown of FCI and BSFC.

    3.6.3.Sampling

    xlvii

    • i. The FCI godown provides samples while issuing foodgrain to

    BSFC

    against

    Release

    Order.

    There

    is

    no

    system

    of

    maintaining or issuing samples in the BSFC godowns. It is the

    duty of the State to ensure that the stocks of food grain

    issued from the FCI godowns

    are not replaced by stocks of

    inferior quality during storage, transit or any other stage till

    delivery to the ration

    card holder. For

    this purpose the FCI

    issues stock wise sealed samples of stocks of food grain supplied by them. The BSFC should ensure that sealed samples are obtained from the FCI at the time of taking delivery of foodgrain. The BSFC should ensure that the samples are displayed in their godowns. They should also issue stock wise sealed samples to the FPS dealers which should be displayed at the FPS for inspection by enforcement squads, Vigilance Committee or the consumers.

    ii. The committee found that sealed samples were issued by the FCI godowns at Patna however, AGM of BSFC godown at Rajbansi Nagar, Patna, stated that no samples are received from the FCI. The Committee is of the view that the signature of the BSFC officials should be taken by the FCI officials and same should be put on record. Copy of same record should be given to the District Manager BSFC so that there is no confusion about the delivery of samples to BSFC. The report of AGM of BSFC godown which he sends to the District Manager should specifically mention whether he received samples or not. In case of any lapse prompt action should be taken by the concerned officials.

    iii.

    Similarly

    samples should

    be

    given

    to the FPS

    dealer at the

    time

    of issuing stocks. A memo should be prepared

    and

    a

    xlviii

    copy signed by FPS owner should be kept at the BSFC godown and one copy should be sent to the District Manager BSFC.

    3.6.4 Record keeping at BSFC godowns:

    • 3.6.4.1 Assistant Godown Manager has to maintain the following registers at the godowns as per the norms.

      • i. Inward/ Receipt Register: This Register maintains the stocks arrived in the godown. It should be maintained scheme wise and commodity wise. All receipts are to be confirmed and report to this effect must be sent to district office within 24 hours of receipt. Sales Register:

    ii.

    iii. Stock Register: it is maintained on the basis of Inward (arrival)

    and Sales Register. iv. Daily Issue Statement: The issue to dealers has to be made in presence of representative of DSO to ensure transparency

    • v. Monthly report: AGM has to submit monthly report to district office along with served copies of SIO’s summary statement of receipt and issuance of all commodities. It should also contain the copies of R.T. Note.

    vi. Godown log book: This register will keep record of opening and closing stocks of godown.

    vii.

    List of Fair Price Shops attached to the Godowns.

    • 3.6.4.2 At BSFC godown, Rajbansi Nagar, Patna, the Committee found that AGM was maintaining Inward/ Receipt Register, Sale Register and the Stock Register. The Godown caters to 140 FPS; however, the list of FPS was not available with the Godown In charge. On being asked to show the list of FPSs, the AGM stated that he does not have list of FPSs and he issues grain to FPSs on the basis of SIO.

    xlix

    • 3.6.4.3 The AGM, BSFC godown, Bazaar Samiti, Begusarai maintained Stock Register and Issue Register. The Registers were maintained only from 31.05.2009. It was stated that the previous godown in charge had not maintained any registers. As per the Stock Register, there was a stock of 37.72 quintals of APL wheat in the godown. The godown incharge stated that since there is no lifting of APL grain, the grain is used only for the purposes of relief and not for PDS. However, since there were no stack-wise boards, the stock couldn’t be checked.

      • 3.6.5 Delayed lifting /Irregular Lifting of grain by BSFC from FCI:

        • 3.6.5.1 The Committee was informed

    that prior

    to 2007 lifting

    of PDS

    grains by BSFC from FCI was not even 50% of the allocation,

    however, the lifting has somewhat increased thereafter as the following figures would show.

    1) During

    April

    07

    to December 07,

    BSFC

    lifted 61.02% BPL

    wheat and 38.33% BPL rice. It lifted 92.42% AAY wheat and

    80.58% AAY rice.

    2) From

    January 08 to December 08, BSFC lifted 55.44% BPL

    wheat and 34.50% BPL rice. It lifted 77.16% AAY wheat and 76.98% AAY rice. 3) From Jan 09 to June 09, BSFC lifted 77.34% BPL wheat and 46.61% BPL rice. It lifted 81.25 AAY wheat and 82.76% AAY rice.

    • 3.6.5.2 An instance of lapse on part of BSFC was found in the District of Bihar Sharif, where the Committee was informed that the food grain for the month of March 2009 was not lifted by the BSFC and the quota of foodgrain lapsed inspite of the fact that the FPS dealers had deposited the money for the said month. The FCI officials stated that both wheat and rice were available in their godown and though many extensions were given to BSFC for lifting grain of March 2009 yet it was not lifted.

    l

    • 3.6.5.3 The Committee was informed by the officials of the FCI godown at ARDC, Begusarai town that in case the allocation of food grain for a particular month lapses due to the fault on the part of FCI, an extension of time period is granted to the State by the FCI for lifting the food grain. The AGM stated that the BSFC lacks storage capacity and often requests the FCI godown to be open even on a holiday so that they could lift the grain in order to prevent lapse of allocation of grain. The FCI always heeds to such requests in order to accommodate the BSFC to lift the stock.

    • 3.6.5.4 The Committee was informed by the BSFC officials that there is acute shortage of storage space with BSFC because of which there is delay in lifting of foodgrain from FCI. Thus, there is need for augmentation of storage capacity of BSFC godowns.

    • 3.6.5.5 Further, it was stated by many BSFC officials that the delay on part of BSFC to lift grain from the FCI is because of the fact that FPS dealers deposit money very late. Recently, vide letter no. 10/07/2170 dated 22.6.09, the Secretary, Food and Civil Supplies Department directed BSFC to deposit from its own resources 25% of the cost of the foodgrains to lift the same timely from FCI.

    • 3.6.5.6 Central

    Government

    allocates

    food

    stock

    for

    65.23

    lakh

    families only which is a figure fixed by the Central

    Government. However, State Government has identified 1.23

    crores BPL families. There is thus bound to be shortage of food

    grains

    for

    BPL

    families

    as much

    as food

    grains

    for

    65.23

    lakh families has

    made to

    meet

    the

    requirement

    of

    1.23

    crores. To

    meet

    this

    requirement State

    Government

    has

    devised the following methods.

    • 3.6.5.7 While the Central Government allocates food grains per family @ 35 Kg (25Kg rice and 10 Kg. wheat) the State Government has scaled down this to 25 Kg. per family (15 Kg. rice and 10 Kg. wheat). State Government is able to manage the quantity of rice required for distribution because of scaling down the allotment of rice from 25 Kg. to 15 Kg. but shortage for wheat remains. State Government has however, not made any arrangement for arranging wheat from its own budget or for seeking additional allocation from the Central Government. It was found that to meet the requirement of wheat the State Government requires

    li

    FCI to shift wheat from one godown to another which entails delay and results in backlog. In some cases there is insufficient food grain allocation for a particular month in a particular district, the food grain in that district is allowed to lapse causing non- availability of foodgrains to beneficiaries.

    • 3.6.6 Transportation: Transportation from FCI to BSFC godowns is done by the trucks of transport contractors appointed by BSFC through tenders. The FPS owner has to arrange for his own transport for transporting the foodgrains from the BSFC godown to his FPS. The transportation process has been dealt in detail under separate chapter.

    • 3.6.7 Shortage of staff at BSFC: Mostly the AGM’s are Incharge of more than one godown as there is shortage of staff. So he opens one godown for 2 days in a week and the other for 2 days. For 2 days, he is at the FCI Godown or managing transportation. The BSFC does not have transport contracts at many places like Patna town, Gaya etc. The AGM, who is godown incharge, has to arrange for transportation himself for lifting the grain from FCI godown each time. The AGM has to open two different godowns, personally go to FCI to lift food grain for them and get the same loaded on trucks and then unload them at the BSFC godown. He also has to maintain records, coordinate with officials like District Manager, BSFC. He is the sole person who has to take care of foodgrains and supervise loaders. Further, he has to do the distribution of grains to FPS dealers. As there is shortage of staff in the BSFC it directly affects the lifting of foodgrain from the FCI, management of godowns, and distribution to FPS.

    • 3.6.8 Diversion of foodgrain during transit and allocation During the Meeting with District Collector at Muzaffarpur on 18 July 2009, the Committee was informed that there are two godowns of FCI in Muzzafarpur which distribute grains to other districts which

    lii

    already have godowns. The trucks going to other districts were thus being diverted. A number of such cases have been registered in the year 2008. This had been brought to the notice of the FCI also. Grain for districts of Sitamarhi and Anantpur should not be lifted from the godown of Muzaffarpur. FCI states that the godown in Muzaffarpur has larger storage capacity and that is the reason that nearby districts are being supplied grain from this godown. The Collector stated that the BSFC should lift it from their respective districts. Inter-district supply should be stopped. In the last 3 years, the trucks seized while diverting grains were those going to other districts. In the Public meeting the committee was informed that the truck owners always take benefit of the situation in those areas where the BSFC does not have transport Contractors, if the AGM has less time to lift large quantity from FCI he has to usually pay extra money to the transporter, which obviously he later recoups to compensate himself by diverting some grain or using some other unfair practice. It came to the notice of the Committee that at the FCI godown at Mokama when PDS foodgrain is lifted by the transporter of BSFC, the trucks are not allowed to proceed by hoodlums unless they are paid by transporter. Question then arose how the transporter would recover the amount. Immediate reply was that transporters offload some bags and sell in market. When this fact was told to the District Magistrate he said the action was being taken against miscreants.

    3.6.9 Delayed supply of foodgrain to FPS:

    • 3.6.9.1 As there is shortage of staff in BSFC, one AGM is incharge of two godowns. The Godowns are not opened daily and hence the foodgrain is not issued to FPS daily. Thus, there are limited days on which FPS dealers can lift the foodgrain. This hampers the smooth functioning of the distribution system and is one of the factors for the delay in supply of foodgrain to the FPS. For instance the AGM, BSFC Godown, Rajbansi Nagar, Patna is incharge of two godowns. The Rajbansi Nagar Godown is in the urban area which he opens on Tuesday, Wednesday and Thursday. He also manages another godown in the rural area which he opens on Friday and Saturday.

    liii

    • 3.6.9.2 The AGM of Khodavanpur is incharge of 2 godowns, one in Khodavanpur and the other in Chaurahi. The stock was lifted by FPS dealers from the Khodavanpur Godown on Wednesday and Thursday only. On perusing the records, the Committee found that the last date on which stock was issued to FPS Dealer was 28.06.2009. When the Committee asked as to why the grain was not issued after 28.06.2009 till the date of visit of the Committee, the AGM replied that in one week he had to go to the FCI to supervise allotment and in the subsequent week, lifting could not be done on Wednesday & Thursday because of non-availability of tractors/trucks in the area. The Committee found some unofficial parallel registers / notebooks being maintained at the Godown. On going through these parallel records, it was found that grain had in fact been lifted on the previous day of the Committee’s visit i.e

      • 15.07.2009. This shows that no proper and dependable

    record is maintained. The same was confirmed upon speaking to some of the loaders at the Godown who stated that the AGM had issued grain on the previous day. However, the Committee found that the same was not put on record. The AGM could not show gate passes of all allotments received from FCI.

    • 3.6.9.3 Another aspect is delayed issue of foodgrain

    by BSFC.

    Committee met many FPS dealers who complained about the delay on part of BSFC. The allocation of foodgrain to one of the shop shows the lapses of BSFC and the consequential and deliberate lapses on part of FPS :

    • 3.6.9.4 Md. Umar,

    FPS

    dealer of ward 10, Madipur, Muzaffarpur

    (licence no-62/85) stated that he has never deposited the

    liv

    Coupons at the ADSO office since August 2008. Thus the Committee found that ration was being allotted on a standard basis by the MO/ADSO without referring to the coupons. The Committee asked about the monthly allocation of grain from BSFC to this FPS in the past one year. He gave the following information:

    Month

    DD submitted or

    Issuance

    not

    August 2008

    Submitted

    Allotted in November

    September

    Not submitted

    -

    2008

    October 2008

    Submitted

    Allotted

    November 2008

    Submitted

    Allotted

    December 2008

    Submitted

    Allotted

    January 2009

    Not submitted

    -

    February 2009

    Submitted

    Allotted only wheat

    March 2009

    Not submitted

    -

    April 2009

    Submitted

    Allotted

    May 2009

    Not submitted

    -

    June 2009

    Submitted

    No allotment

    July 2009

    Submitted

    No allotment, (Coupons also not distributed to

    beneficiaries)

    • 3.6.9.5 The Committee observed that no food grain has been lifted by the FPS for the month of January 2009 and March 2009. Only wheat was lifted in February 2009. Food grain was lifted in April also. However, as per the sales register no distribution has been made of the wheat lifted in February 2009 and the food grain (Rice and Wheat) lifted for the month of April.

    • 3.6.9.6 The dealer stated that in the past one year, BSFC has issued ration for 6 months only. A dealer has to submit Bank Draft by 25 th of the previous month otherwise he is not allowed to submit it later and the allotment lapses. The dealer further stated that despite depositing the Bank Draft by 25 th of the

    lv

    previous month, he gets his SIO at the end of the month for which DD is deposited. For instance, to obtain the food grain for the month of April, he has to submit his DD by the 25 th of March. However he gets the SIO by the end of April. However he gets his allocation i.e. he can actually lift the food grain only after 2-3 month from the date of SIO. For the month of December he submitted Bank Draft in November and got SIO at the end of December. Thereafter, he was able to lift grain from the godown only in February – March. The Committee

    found that, Utilization Certificate, Form-20 and Coupons have not been taken by Marketing Officer at Tajpur Block, Samastipur from FPS dealers since 2008. It appeared that the MO was not even aware of Form- 20.

    3.6.10 Irregularities in allocation of foodgrain to FPS

    • 3.6.10.1 The

    Committee observed that there

    is

    no

    check on

    the

    functioning of the MO and the PDS Dealer. The Committee visited the office of the Marketing Officers to understand the roles and responsibilities of the officer and also to assess the process of allotment and distribution of grain at the level of

    the M.O. The objective of the visit was to see as to how the coupons were received from the dealers and the corresponding allotment of grain to the dealers on the basis of the coupons submitted. The Committee intended to peruse

    records

    pertaining to monthly

    allotment

    of

    grain

    and

    in

    particular, the records pertaining to Store Issue Order and

    Utilization Certificate.

    • 3.6.10.2 The dealer is required to deposit Form-20 along with coupons and Utilization Certificate duly signed by any member of the Vigilance Committee at BSO/ MO office. The BSO, Bodhgaya was unable to show his record and stated that the same were not available with him at that time.

    • 3.6.10.3 The Committee inspected the Utilization Certificate, Form-20 and coupons at BSO office of Sherghati Block, Gaya and found that there was no similarity in the number of coupons mentioned in the certificate and the number of coupons

    lvi

    present in the office. The Committee observed that coupons of both rice and wheat were taken by the FPS dealers from the beneficiaries’ inspite of the fact that he had distributed only one of the commodities to them. The Committee also inspected documents pertaining to various shops. When the Committee examined the records of the FPS at village Cherki, ward no, 3, (licence no, 377/07), it was found that the shop had distributed only AAY grain; BPL grain was not distributed. The Committee observed that number of coupons deposited did not correspond with the number of coupons mentioned. The Committee observed that the Utilization certificate was signed by the Sarpanch, Mukhiya and one Ward member. Ward Member Gulabi Devi had only put a thumb impression. There was no mention of serial numbers of coupons on Form

    20.

    • 3.6.10.4 At the office of Marketing Officer, Chitwara, Samastipur, the Committee was shown the list of FPSs under the jurisdiction of the M.O. The Committee identified 4 FPSs on a random basis and asked the M.O to show the documents of allocation pertaining to the said FPS. However, to the surprise of the Committee members, the M.O could not find any of the documents at his office. The documents pertaining to allotment of the previous month were also unavailable. The M.O first stated that the documents could not be found because the person who handles them is not around and if he had prior knowledge of our visit, he would have ensured that those documents were readily available at the office. However, later the M.O stated that the documents were at his home as he had taken them to discuss it with his seniors in view of the Committee’s visit to the office.

    • 3.6.10.5 The Committee then perused some stacks of coupons that were shown by the M.O. The Committee was informed that these coupons are kept FPS wise and are tied in a bundle in a month wise manner. However, on going through the bundles of coupons, the Committee found that though the slips attached with each bundle stated that the coupons were of a particular month, it was clear that there was no system of month wise stacking of coupons. Each bundle had coupons of various months, though the number of coupons in a bundle conveniently added up to the total number of beneficiaries in each FPS. In fact there were numerous coupons, which were of a particular month (April) but there was overwriting on it and it was made March by hand. When the Committee asked as to how the MO accepted such coupons, he had no explanation

    lvii

    other than stating his helplessness in going through hundreds of coupons every month. The Committee specifically asked for the ration coupons last collected by the MO, on the basis of which fresh allotment was made, however the MO failed to show even those.

    • 3.6.10.6 On the Committee’s visit to the office of the Marketing Officer, Tajpur Block, Samastipur, the M.O informed that there were 16 Panchayats in the block and 47 FPS (39 functional and 8 were either suspended or on leave). The Committee perused files pertaining to the monthly allocation of FPS. Documents pertaining to the following FPS were specifically perused:

    Panchayat

    FPS dealer

    Total

    BPL

    AAY

     

    Card

    Kothia

    Ganesh

    893

    147

    36

    Chaudhary

    Ramapur

    Urmila

    353

    200

    91

    Shahpur

    Shaukat Ali

    1312

    432

    200

    Bhagauni

    Bharokhada

    Gunar Mahto

    480

    • 623 405

     

    +1127

    Aadharpur

    Phuleshwari

    927

    • 289 158

    Devi

    • 3.6.10.7 On examining the record of the aforesaid five FPSs, in the office of Marketing Officer, the committee observed that the allocation of foodgrain to FPS was not done every month; secondly, allocation had not been made on the basis of coupons collected by FPS; thirdly, allocation to FPS exceeded the number of beneficiaries attached to that particular FPS. For instance as per records of the department the allocation of the following shops is -

      • 1. Ganesh Chaudhary

    Monthly allocation,

    AAY wheat

    AAY rice

    BPL rice

    BPL

    2009

    (in Q)

    ( in Q)

    wheat

    February

    13.80

    20.70

    No

    No

     

    record

    record

    June

    13.80

    20.70

    No

    No

     

    record

    record

    July

    3.60

    5.40

    14.70

    22.5

    • 2. Urmila Devi

    Monthly allocation,

    AAY wheat

    AAY rice

    BPL rice

    BPL

    lviii

       

    2009

     

    wheat

       

    February

     

    9.10

    13.65

    No record

    No

       

    record

     
     

    May, April & March

    No record

    No record

    No record

    No

       

    record

     
     

    July

    13.65

    19.10

    No record

    No

     

    record

     
     

    June

     

    13.65

    19.10

    No record

    No

       

    record

     

    3.6.10.8

    If

    we

    take the

    example

    of

    the first dealer,

     

    i.e., Ganesh

    Chaudhary then as per the number of AAY cards, i.e., 36, the

    allocation

    for a month should be 3.60 Q wheat, 5.40 Q Rice.

    As per the number of BPL cards, i.e., 147, the allocation for a

    month should be 14.70 Q. wheat and 22.05 Q. rice However,

    13.80

    Q

    wheat and 20.70

    Q

    rice was

    issued

    to

    FPS

    in

    the

    month of February and June for AAY category. No BPL foodgrain was issued to the FPS except in the month of July.

    • 3.6.11 Capital of FPS gets blocked The capital of FPS owners gets blocked for three to four months as foodgrains are not issued in time by BSFC. The FPS owners pay money out of their own pockets to deposit Bank draft by the 25 th of the previous month (i.e. payment is made in advance to the month for which grain is to be lifted). One of the reasons for delay in issuance was that SIO are not sent from BSFC Regional office to Godown. Thus, it is suggested that they should be allowed to deposit money only when grain is available for lifting at the BSFC godown. It is also suggested that a system of e-banking should be adopted for depositing the money by FPS Owners to avoid unnecessary expense on part of FPS dealers in making payment by DD and to reduce the number of visits to the concerned office. The amounts so received through E-banking from the Fair Price Shops shall also be verified and authenticated by Food and Civil Supply Department and FCI online to ensure that the amounts remitted correspond to the allocation of Fair Price Shops. For

    lix

    this purpose, a computerized system should be in place to ensure connectivity between these three agencies so that remittances can be properly monitored at all ends.

    • 3.7 Distribution of foodgrain by FPS to the Beneficiaries

    3.7.1 The Ration cards of the TPDS beneficiaries were cancelled in the beginning of 2007 and presently there are no ration cards in the State of Bihar. Presently ration is distributed only on the basis of coupons. The Committee was informed that the new list as per 2007 survey has only name of the head of the family. As the department is preparing data incorporating name of every family member, it is taking time. It was further informed that there are 57 lakhs objections against the 2007 survey list. Hence, presently the ration is distributed only on the basis of coupons i.e. beneficiary has to submit his coupon and pay money to the FPS dealer. Deputy Secretary of Food informed that as per instructions issued in February 2009 Rural Development Ministry had to complete the survey within 3 months. The same has not yet been completed. It is not certain as to when the same will be completed. Examination report of the objections is likely to be completed by August 2009. 6

    3.7.2 As per Planning Commission 65 lakh (6.5 million) families in Bihar have been declared Below Poverty Line. Total number of BPL families in Bihar is 1,21,41,000 as per the 2007 BPL survey in the State. Government of India is allocating foodgrains for the BPL families as per Planning Commission data. State has distributed coupons as per the new 2007 survey of BPL; hence it is difficult for State to distribute the foodgrains to all the coupon holders. The State Government in order to provide foodgrain to the increased number of BPL persons, after the revised BPL survey in the State, decided to purchase food grain at an economic rate from FCI and to provide the same to BPL beneficiaries at BPL rate. The difference between the economic rate and BPL issue price is borne

    6 Meeting with Dy. Secretary Bihar on 30 th July 2009 at CVC office.

    lx

    by the State Government. For this State Government permitted to spend and release Rs 60 crore. 7

    3.7.3 The beneficiaries of the Public Distribution Scheme lift their ration from the FPS with which they are attached generally to the nearest FPS. There are 44,480 Fair Price Shops in the State of Bihar. The Fair Price Shops in the State opens from 7 a.m. to 1 p.m. in summer and 8 a.m. to 2 p.m. in winters. The Committee observed that there is always delay in distribution of food grain to beneficiaries. The most disappointing fact is that food grain is not distributed every month. The Committee visited many villages and towns and met lots of beneficiaries. It was general complaint in villages that during last year they got food grain only for 2-3 months. Beneficiaries showed their coupons of past 8-10 months to the Committee which were with them only as no ration was given to them.

    3.7.4 As per the food bulletin issued by the Ministry the allocation of foodgrains (rice and wheat) under the APL category was 218.330 MT in the year 2008-2009. The offtake in this category was 17.729 MT which is only 8.12 % of the allotment. The State Government in its reply to Questionnaire sent by the Committee submitted that the allotment of grain under the APL category was very small. The allocation is received only on festivals, which is then distributed only to the APL families in Urban areas. The committee observed at the, BSFC godown, Bazaar Samiti, Begusarai that as per the Stock Register, there was a stock of 37.72 quintals of APL wheat in the godown. The godown incharge stated that since there is no lifting of APL grain, the grain is used only for the purposes of relief and not for PDS. As there is no ration cards and food coupons are not

    7 Letter no. BPL-04/08 of Food Secretary.

    lxi

    distributed

    to APL families

    it

    is

    not

    clear how the foodgrain

    is

    distributed to the APL families residing in Urban areas.

    3.7.5 That the Committee in its visit to one State after another has found that the concept of APL is serving no useful purpose for food security and is instead only a diversion tool. The Committee is aware of the fact that there is going to be a great deal of opposition from the FPS dealers and other vested groups against the abolition of the APL category. If the Hon’ble Court is of the view that it may not be possible or desirable to abolish the APL category altogether, it may consider limiting the APL category to households whose annual income is Rs. one Lakh. This category may be called “Marginally Above Poverty Line (MAPL)”. This limit may however, be revised as and required on a rational basis by the government.

    3.7.6 Duties of FPS dealers

    As per PDS Control Order 2001 each FPS shall display the following information on a notice board which is to be put up at a prominent place in the Shop on a daily basis:-

    • 1. List of BPL and Antodaya beneficiaries,

    • 2. Entitlement of essential commodities,

    • 3. Scale of issue,

    • 4. Retail issue prices,

    • 5. Timings of opening and closing of the fair price shop,

    • 6. Stock of essential commodities received during the month,

    • 7. Opening and closing stock of essential commodities and

    • 8. The authority for redressal of grievances/lodging complaints with respect to quality and quantity of essential commodities under the Public Distribution System.

    lxii

    3.7.7 The

    FPS

    dealer

    in

    the

    State

    has

    to

    issue

    foodgrain

    to

    the

    beneficiaries as per the entitlement printed on the coupon. Presently wheat is distributed @ 4.96 per kg and Rice 6.52 per kg to BPL beneficiaries who are entitled to get 10 kg wheat and 15 kg Rice. Similarly AAY beneficiaries are entitled to get 10 Kg wheat @

    Rs. 2 per Kg and 15 kg Rice @ Rs 3 per Kg. When a beneficiary

    comes to

    the FPS dealer for taking his monthly entitled foodgrain

    he has to pay the amount to FPS dealer as per the fixed rates

    mentioned on the coupon and has to submit the coupon for the month for which he is taking foodgrain from FPS. The Beneficiary has to put thumb impression or signature on the coupon while

    submitting his coupon.

    During its visit to various Fair Price shops

    and villages where committee interacted with the beneficiaries,

    Committee found many irregularities in the distribution system.

    3.7.8 Many shops do not open and do not distribute foodgrains.

    Committee visited many FPS shops in various districts of the State. It was observed that many FPSs in the State do not open at all and rest open irregularly. Most of the Shops which were found open by the Committee were opened on the special instructions of the officers of the area after informing them about the probability of FPS being visited by this Committee. The Committee was surprised on its first day of visit to the FPSs when all the shops were found closed. It is learnt that most of the shops remain closed. Committee on asking the residents of the place and neighborhood shopkeepers came to know that these shops do not open. Few of such shops are

    • 1 FPS at Fulwari Sharif

    of Sh. Om Prakash, Licence No. 60/87

    was closed as the owner was on leave for long period and the cards of his shop are tagged with the shop of one Mr. Vinod Kumar.

    • 2. FPS owner Vinod Kumar, at Fulwari Sharif was found closed at 9:30am.

    • 3. FPS of Mithlesh Prakash located at Pethia Bazaar, Fulwari Sharif, was found closed at 9:45am. One small notice was put up outside the FPS stating that dealer has gone to lift foodgrains. Neighboring shop owners stated that the FPS is always closed and he only opens on the 20 th of the month. They further informed that in the morning, before the visit of the Committee members, the FPS owner had come to put up the abovesaid notice.

    lxiii

    4.

    FPS situated in Ward No.12, Barauni ,Licence No. of Shop is 1/2007 was found locked at 10.20 a.m.

    5.

    FPS

    at village Mehdoli

    Ward

    No.

    3-6, Bhagwanpur block

    allotted in the name of Jaymala Devi under licence number

    3/90 was found

    locked on

    16/7/09. On the

    display board

    outside the shop it was written in hindi that the dealer had

    gone to the doctor. The Committee asked the MO to submit a report stating as to why the FPS was locked during the working hours. Later in the day, the MO submitted a report which stated that the FPS was locked and he could not meet the dealer. However, with the report, the MO also attached a medical certificate stating that the dealer had visited the

    doctor with regard to some ENT problem.

    It is worth noting

    that if M.O was unable to meet FPS dealer how he had

    obtained that medical certificate. Medical certificates are

    usually issued by Medical practitioners only on asking for it.

    The incident shows the intention

    of FPS

    dealer to hide

    the

    information which could have been observed by the Committee if the shop would have been open.

    6.

    FPS

    with

    Licence

    No.

    51/85

    at

    Village,

    Bhagwanpur was found locked.

    Mehdoli

    Block,

    7. FPS of Jagdish Singh at Village Mehdoli, Ward No. – 5,6,10,11 (Licence No. 63/85) was found locked. The display board had a handwritten note which stated that the dealer had gone to Begusarai for some work. This note was also dated 16/07/2009. The Committee observed that the note at the FPS having licence no. 3/90 and at the present FPS had been written by the same person as the handwriting was the same.

    3.7.9 The above examples clearly show that the abovesaid shops do not distribute ration to the beneficiaries. Marketing officers and Supply Inspectors are duty bound to inspect the shops regularly. The M.O decides the allocation of each FPS; the Bank Draft is also submitted by the FPS at the office of the Marketing Officer (in town area)/ Block Supply officer (at rural areas) hence it can’t be ruled out that there is strong nexus between MO / BSO and FPS dealers. Without the connivance of the officers it is not possible for FPS dealers to

    lxiv

    open shop irregularly, and get allocation without showing coupons or distributing grains.

    • 3.7.10 Improper Record keeping at FPS and false entries in Registers:

    The Committee observed that FPS dealers in the State do not maintain the records of the stock received, sales done, and coupons collected by them. The Committee also found parallel accounts at many FPSs with a view to manipulate and adjust the official record to keep it intact. Some of the findings are mentioned herein. The Committee visited the shop of Gupta Prasad at village Sikaria, Jahanabad in evening. His Licence No. is 18/2007. The dealer does not maintain all registers. His Stock register showed irregular supply of foodgrain. He does not maintain Sales register. He stated that he collects coupon but has no record of previous months’ coupons which had been submitted at M.O office. The Concerned M.O was also present but showed ignorance. The Committee asked the dealer for the details of the foodgrains distributed 2-3 days earlier; but the dealer stated that he had submitted all the coupons collected till the previous day of the Committee’s visit. At some places the Committee observed that FPS dealers intentionally hide the stock registers. For instance, Stock Register was not shown at the FPS of Krishnanadan Rai having licence no. 7/2008 situated in ward 10, Barauni, Begusarai. The Committee also found parallel accounts at FPS shops. At Fair Price shop of Shamim Ahmed Ansari, situated at ward no. 9 Madipur , Muzaffarpur having licence no. 19/91 committee found some parallel accounts being maintained in separate non-official note books. However, he has made proper entries in the main Register which he maintains for official record. The discrepancy in the two registers and the entries in the Kachha / parallel Register showed that the entries in official register were false. FPS dealer Gopal Pandit at Ward No.12, Chitkora Bazaar, Patna (Licence No.78/2008) did not show the Sales Register.

    • 3.7.11 Diversion and Black marketing of foodgrain by FPS dealers 1. Diversion of foodgrain happens in many ways. FPS dealers are diverting foodgrains to influential people or to the open market. They often sell it to non-beneficiaries at higher price and earn profit. Many FPS owners accepted diversion and tried to justify this by saying that as they get less commission they are diverting foodgrains to meet their household expenses. It is emphasized that there should be Zero tolerance for any

    lxv

    kind of irregularity or illegality System.

    in the Public Distribution

    • 2. At the shop run by Shamim Ahmed Ansari, situated at ward no. 9 Madipur, Muzaffarpur having licence no. 19/91, committee found some parallel accounts being maintained in a separate non-official note books. On perusing the note books it was found that a large quantity of grain was being given to various persons including one ‘Neta Ji’ and one ‘Railway Aurat’. Infact on one occasion 10 kg. rice and 50 kg. wheat had been given in the name of Neta ji. On further probe the dealer admitted that he was indeed giving out ration to non card holders. The Neta ji was actually the local Ward Counselor, who pressurized the dealers to give such quantities of grain every few months. The dealer insisted that he had to succumb to the Ward Counselor’s pressure. The dealer however could not explain the regular distribution of grain to the Railway aurat. The dealer also admitted that he sells PDS ration to non cardholders to earn more profit.

    • 3. The Stock Board at shop of Gupta Prasad at village Sikaria, Jahanabad (Licence No. Rice - 7.09. However,

    is

    18/2007) showed

    Wheat - 4.90,

    the dealer stated that he has only 2 Q

    stock. On checking the shop, 6 bags of wheat and 80 bags of

    rice were found. Dealer did not show the sales register. If he had 4.90 Q Wheat as per stock board, he should have 10 bags of Wheat, however he only had 6 bags of wheat i.e. 3 Q wheat. Similarly he should have 14 bags of rice. However, he

    had

    80 bags

    of Rice

    i.e.

    40

    Q

    rice.

    The FPS

    dealer had no

    justification for the extra grain present in shop.

    lxvi

    4.

    The Fair Price Shop of Avinash Verma situated at Ward No.9 Madipur, Muzaffarpur having licence no. 25/92 admitted that he diverts foodgrain to earn profit.

    5. Distribution was not done regularly in the FPS run by Md. Umar at Ward No. 10, Madipur, Muzaffarpur having Licence No. (Old) 62/85. As per the Sales Register he distributed 10 Kg. wheat to 3 persons on 17.07.2009 .i.e. a day before the Committee’s visit to the shop, on coupon number 5198, 5436 and 5389. Cross checking the coupons, it was found that on the coupon number 5198 the dealer gave ration for the month of December 2008, on 5436, he gave for November 2008 and Coupon number 5389 was not found. It is pertinent to mention that the said coupons were found in middle of the bunch of the coupons. Even though the distribution was done a day before. The Committee observed that since the whole booklet of coupons issued to a particular beneficiary has the same serial number on each months coupon, it is difficult to determine as to when i.e. in which month the coupon is actually given to the dealer. Neither there is any mention of date of issuance of ration on the coupon nor there any entry in the register stating for which month the allocation has been made to the beneficiary. The Sales register of the dealer had entry only with regard to the coupon number and quantity issued. The Committee had no means to find out whether the coupon showed by the dealer pertained to the entry made on 17.07.2009. Committee observed that it is not easy to cross check sales register and coupon and this gives the opportunity to the FPS dealers to manipulate records and easily divert the foodgrain.

    lxvii

    6. FPS of Krishnanandan Rai situated at Ward No.10, Barauni, Begusarai, (Licence No.7/2008) has 905 APL, 176 BPL, 70 AAY. The Committee was told that the dealer had gone to the hospital as his mother was on her death bed. The room which was being used as the FPS was adjacent to another room which also had stocks of grain. The two rooms were connected by a common door. When the Committee asked about the other room and the stock therein, the dealer’s son replied that the other room had the stock from his own farming. It was mainly wheat and sarso. Prima facie it was difficult to distinguish between the stock in the two rooms. However, on close scrutiny the Committee found about 5-6 machine stitched bags in the room which had the dealer’s own stock. The bags were clearly the ones which come from the PDS godowns. When the Committee enquired about the same, the dealer’s son admitted that those bags were not of his own stock but could not give a cohesive answer. He ultimately blamed it on the labourers and said that the bags must have been dropped in the room by the labourers by mistake.

    3.7.12 Fair price shop dealers charge higher rates then the actual price FPS dealers charge around Rs. 15-20 extra per beneficiary for one month. Many FPS owners justified this by stating that they charge it because they get less commission and their transportation cost is more than what is fixed by the Government. Few of such instances are:

    1. The villagers of Kanaudi village (Jahanabad) who are attached to the shop of Gupta Prasad at Sikaria Block informed that the dealer charges Rs.5/- per kg instead of Rs.4.96/- for wheat. For rice he charges Rs.7/- instead of Rs.6.52/-. Thus if a beneficiary takes 15 kg rice he has to pay Rs. 97.8/- however dealer charge Rs 105/- from beneficiaries.

    lxviii

    2. Number of beneficiaries attached to FPS of Avinash Verma , Ward 9, Madipur, Muzaffarpur, stated that the dealer indeed took extra money, (Rs.15-Rs.18 per kg., per person) for the ration. He threatened the beneficiaries that if they do not give extra money, they will not get their ration. The beneficiaries informed that they had even complained to the officials about this but no action was taken. Upon probing, the dealer admitted that he takes extra money from the beneficiaries as he had to pay bribe to the officials to get his allocation and also had to pay for the transportation cost to bring the food grain from the BSFC Godown. There was general grievance of FPS dealers that they have to pay money to the officials of the Department, they also have to pay money to the AGM at the time of lifting. The dealers have to satisfy the Mukhiya and other important members of the Vigilance Committee.

    3.7.13 Improper Weighment system

    Most of the FPS dealers do not use proper weighing system. Many

    dealers use false and erroneous weighment.

    weights

    or

    even

    stones

    for

    1.

    FPS

    dealer Gupta Prasad

    of Sikaria

    was using stones

    instead of iron weights even though Iron weights were lying in one corner of the inner room of his shop. 2. Though the dealer Md. Umar of ward no. 10, Madipur, Muzaffarpur readily showed the receipt of Rs. 125/- from the W & M department as prima facie proof of having got his weights and scale certified, upon enquiry it was found that neither the weights nor the scale had been certified since 2003. The same was evident from the old stamp on the weighing scale. 3. Dealer Shamim Ahmed Ansari , ward no. 9 Madipur, Muzaffarpur (licence no 19/91) informed that he gets his

    lxix

    scale and weights checked and certified from the Weights & Measure Department regularly and keeps his certificate updated. However, upon enquiry it was found that he had not got his scale and weights certified since 2003.

    • 4. Scale and weights of dealer Avinash Verma ,ward no.9, Madipur Muzaffarpur (licence no. 25/92) were not certified since 2003.

    • 5. At shop of Dealer Krishnanandan Rai at Ward No.10, Barauni Begusarai (Licence No.7/2008) the Committee was also shown the annual certificate from the Weights and Measures Department for having certified the weights and the scale of the shop to be aligned. However, upon enquiry it was found that neither the weighing scale nor the weights had been stamped since 2005.

    • 6. At one of the FPS of Rajesh Kumar in Ward no. 12 (licence no 65/08), Patna Committee found that FPS had hollow weight of 5 Kg. which he was using for weighing grains for beneficiaries thus, he was giving less grain to beneficiaries. The committee found lots of extra bags full of foodgrains in his shop. FPS dealer manipulated beam and used under weigh for diversion. As per the Stock register and the Sales register (which were produced after almost 15 minutes) he had no wheat and rice stock in his shop. However, the bags of both the wheat as well as rice were available in the adjoining room. When the Committee members wanted to inspect the same the dealer with the help of his family members and in full view of the Marketing officer of the area dragged the said bags in his Kitchen. The fact that stock and the Sales Register were manipulated was proved by this incident. Further this dealer was using two 5 kg weight. When the Committee

    lxx

    tried to check same by putting both the weight separately on the two sides of the balance, it was found uneven. Infact one side of balance hardly showed any weight. Committee realised that the said weight was hollow from inside when picked it in hand. Immediately the father of the dealer lifted the erroneous weight and took it inside the room. Thus, committee realised that weights and beam are easily manipulated by FPS dealers to provide lesser quantity of foodgrains. The ADSO/MO stated that they do not have power to take any action to initiate prosecution in such cases as the same belongs to the weights and measures department and they can only suspend shop. However same is not true.

    • 3.7.14 Nexus between officials and FPS

    • 3.7.14.1 Corruption is present in the Public Distribution System of the State. The cause not only lies in the lack of transparency or accountability in the functions of the government but also in the lack of awareness among the people. There is no monitoring of FPS as there is strong nexus between officials of the Department and FPS dealers. Senior officials of the department do not inspect the shops though they are bound to do so.

    • 3.7.14.2 FPS run by Krishnanandan Rai is situated at Ward No.10, Barauni, Begusarai. The shop is run under Licence No.7/2008 Later, on checking the mobile phone of the MO accompanying the Committee, the Committee found that the MO had already informed the said dealer’s son (Sonu) 20 minutes before the visit of the Committee. The dealer’s son’s name was present on the MO’s mobile and there was a call from the MO’s mobile to the dealer’s son 20 minutes before the Committee’s visit. This is despite the fact that the Committee had made it clear to the officers that it wanted the FPS inspections/ visit to be surprise checks.

    • 3.7.14.3 In another instance the Committee came to know that due to backlog in lifting, the money of the dealers get blocked and in many cases the dealers are not able to collect sufficient

    lxxi

    money Mafia groups operating in the area takes this opportunity and deposit money in the name of such dealers. When the allotment is received they sell the PDS Commodity in the black market in connivance with the dealers. In case the FPS dealers go to money lenders they have to pay interest at exorbitant rates.

    • 3.7.15 Delay in allocation of foodgrain to Beneficiaries (Backlog)

      • 3.7.15.1 There is backlog in allocation of foodgrain to beneficiaries and the beneficiaries get ration of a month after delay of about 3- 4 months. As the quota of many months lapse due to various reason like non lifting by BSFC or by FPS, the beneficiaries do not get ration every month. In the year 2008 it was the general complaint of the beneficiaries that they got ration only for 2-4 months. The Fair price shops do not receive foodgrain regularly and thus they do not submit money for few months. Ultimately, it’s the beneficiary who suffers.

      • 3.7.15.2 The Committee observed that from the FCI, foodgrain goes to BSFC and from BSFC to FPS. FPS gets quota after 3-4 months and they have to deposit demand draft by 25 th of the previous month. They keep depositing money for successive months without getting ration hence their capital gets blocked. The consequence is that they skip depositing the Bank draft for few months in between. Quota for those months, for which they don’t deposit money, lapses.

      • 3.7.15.3 At village Kanaudi, Jahanabad the villagers complained that Gupta Prasad, the FPS Dealer does not give ration to them. Last year i.e. in 2008 they got ration only for 2 months. They also showed unused coupon from October 2008 to May 2009. The villagers also stated that at times they do not have the money to purchase the entire quantity of rice in one go. So they purchase it in two installments.

      • 3.7.15.4 Committee met the beneficiaries attached to the FPS shop of Avinash Verma situated at Ward No.9 Madipur, Muzaffarpur having licence no. 25/92.

    1. Aftab Alam, Coupon No.0414856, BPL Card holder. He complained of short weighment and also the fact that he had not received ration for 7 months since September 2008. He showed 7 unused coupons. He complained that the dealer took extra money for the ration

    lxxii

    2. Shabnam,

    Coupon

    No.0134142,

    AAY

    card

    holder.

    She

    complained that the dealer takes Rs.18 extra for the ration.

    She had not received ration since October 2008. She had 5 unused coupons.

    3. Many beneficiaries informed

    that

    though

    they

    had

    the

    knowledge

    that allotment for February

    was lying

    at

    the

    dealer’s shop,

    the dealer was not issuing

    it

    to them. The

    Committee

    had

    also

    found

    that

    allotment

    of

    grain

    for

    February was indeed lying at the dealer’s shop. On enquiring

    as to why the dealer was not issuing ration to the

    beneficiaries,

    he

    simply

    refuted

    the

    allegations

    of

    the

    beneficiaries

    and

    stated that

    he

    was

    willing

    to

    give the

    ration but they themselves were not taking. The

    beneficiaries

    refuted allegation.

    Thus

    it

    was only

    on

    the

    Committee’s intervention that the dealer was compelled to admit the presence of stock which the beneficiaries could claim.

    3.7.16 Beneficiaries get 25 kg foodgrain instead of 35 kg.

    • 3.7.16.1 The number of BPL families in the State of Bihar is 65.23 Lakhs as per the estimates of the Central Government. The Central Government is allocating food stock for 65.23 Lakh families only. However, the State Government has identified 1.23 Crore BPL families. Thus, there is a shortage of food grain unless the State makes up the deficiency by procuring/ purchasing more food grain.

    • 3.7.16.2 The Government of Bihar revised Public Distribution System and slashed quota of foodgrain for BPL families from 35-25 kg. Bihar Government claims that the members per family in the state are 4.38. 8 Earlier, the State was distributing 35 Kg per family i.e. 25Kg rice and 10 Kg wheat. Now, the distribution per family is 25 Kg comprising 15Kg rice and 10 Kg wheat.

    8 Indian Express dated 29 th march 2008,

    lxxiii

    Thus the State is able to manage the quantity of rice required for distribution because of scaling down the allotment of rice from25 kg to 15 kg but there is shortage of wheat as State Government has not made any arrangement for wheat from its own budget or for seeking additional allocation from the Central Government. It is pertinent to mention that by this decision the Government of the State has violating the directions of the Supreme Court dated 10 th January 2008.

    • 3.7.16.3 At Kako village in Jahanabad, the beneficiaries were aggrieved by the fact that though the center was allotting 35 kg. grain, the people were only getting 25 kg. allotment.

      • 3.7.17 Sample of foodgrain at FPS

    The Committee found that the FPS dealers do not keep samples of foodgrains at shop. Most of them complained that they do not receive samples from BSFC godown. At Fair Price shop run by Shamim Ahmad Ansari, situated at Ward No.9, Madipur, Muzaffarpur Licence No.19/91, The dealer eagerly showed grain samples packed in normal polythene bags. He stated that the said bags were samples he received from the BSFC. The packets did not have any seal or signed slip. On persistent enquiry the dealer admitted that he himself had made the packets to show it to the Committee. At the shop of Avinash Verma (situated at Ward No.9 Madipur , Muzaffarpur having licence no. 25/92)dealer stated that he had prepared samples as he was informed about the visit of the Committee by department officials.

    3.8

    Conclusion

    1)

    The

    Committee

    observed

    that

    BSFC

    does

    not

    lift

    foodgrain regularly and lifts foodgrain as per the

    availability of money and storage space with them. The FPS has to deposit Bank draft by 25 th of the previous month however they get foodgrain after 3-4 months

    hence their capital gets blocked. Dealers often

    skip

    depositing of Bank draft for few months in between.

    Quota for those months, for which they don’t deposit

    money, lapse. Further,

    as

    FPS

    lift

    foodgrain for few

    months only but same grain is not distributed 100% to

    beneficiaries. It

    gets

    diverted to black

    market or

    is

    lxxiv

    supplied to politicians/ influential persons. Beneficiaries gets ration for 2-3 months ration only. As no coupon, utilization certificate is cross checked, Utilization certificates and Form-20 are hardly deposited. No record is kept at M.O office regarding coupons serial no. or utilization certificate and Form-20. FPS dealers do not maintain Sales Registers and they weigh less. All this leads to the fact that even though Central Government allocates ration for a year, beneficiaries are getting only for 2-3 months. All this adds up to the trauma of beneficiaries.

    2)

    Corruption is present in the Public Distribution System.

    3)

    The cause not only lies in the lack of transparency or accountability in the functions of the government but also in the lack of awareness among the people. There is no proper weighing system at all levels of distribution i.e. at FCI, BSFC and FPS.

    4) The quality of foodgrain can not be checked as no sample is issued to FPS dealers by BSFC nor do they keep samples at their godowns.

    5)

    There is acute shortage of storage space with BSFC. BSFC also do not have sufficient staff to ensure proper functioning of Public Distribution System.

    6) The FPS shops do not keep list of BPL and Antodaya beneficiaries.

    7)

    Records are not properly maintained by the FPS dealers.

    8)

    At many places it was observed that the Sales Registers were not at all maintained. Fair price shop dealers charge higher rates then the

    9)

    actual price. Fair Price Shops do not open daily.

    lxxv

    10)

    There is no monitoring of FPS as there is strong nexus

    11)

    between officials of the Department and FPS. Senior officials of the department do not inspect the shops even they are bound to do so. FPS dealers charge around 15-20 Rs. extra per

    12)

    beneficiary for one month which many FPS owners accepted and said they charge it because they get less commission and less transportation charges and their transportation cost is more than what is fixed by the Government. The beneficiaries get ration of a month after delay of

    13)

    about 3-4 months. As the quota of many months lapses due to various

    14)

    reasons like non-lifting by BSFC or by FPS the beneficiaries do not get ration every month. In the year 2008 it was general complaint of the beneficiaries that they got ration only for 2-4 months. There is diversion of foodgrain by FPS dealers as they

    15)

    often sell it to non- beneficiaries at higher rates to earn profit. Dealers are diverting foodgrain meant for PDS beneficiaries to influential persons.

    3.9

    Recommendations:

    1. Committee was informed by the BSFC officials that there is

    acute shortage of storage space with BSFC because of which there is delay in allocation of foodgrains. Thus, there is need of augmentation of storage capacity of BSFC godowns.

    lxxvi

    • 2. Committee is of the view that there should be electronic weighment system in each godown and weighment check Memo should be electronically generated and the system of making manual weighment receipts should be done away with at each godown of FCI and BSFC.

    • 3. The signature of the BSFC officials acknowledging receipt of samples should be taken by the FCI officials and same should be put on record. Copy of same record should be given to the District Manager BSFC so that there is no confusion about the delivery of samples to BSFC. The receipt report of AGM of BSFC godown which he sends to the District Manager should specifically mention whether he received samples or not. In case of any lapse prompt action should be taken by the concerned officials. Procedure of sampling of foodgrains received at BSFC godown should be strictly followed.

    • 4. Weighment errors and quality of grain can be checked by small packaging of the foodgrains. Thus, State can consider the small tamper proof packaging of the foodgrains.

    • 5. There is no ration card in the State. The State should take prompt action and expedite the issuance of the Ration cards to the deserving and eligible beneficiaries.

    • 6. There should be proper monitoring of the records of FPS dealer, and records maintained at the office of Marketing officer/ BSO by the superior officers. Similarly records of BSFC Godowns and condition of storage of foodgrain and regularity of lifting of foodgrain by AGM of BSFC godown are continuously monitored by the Senior officials.

    • 7. The distribution of FPS can only be monitored if there is proper accounting of the food coupons. As food coupon system in the State has many loopholes it is easy for errant FPS dealers or corrupt officials to develop nexus and divert

    lxxvii

    foodgrains. Thus, there should be proper and regular accounting of the food coupons by officials. It is pertinent to mention that as the State has no ration cards, food coupons are the only measure to distribute grain. However, same should be treated as interim measure and not the permanent system of distribution and State should take prompt action to issue Ration Card.

    • 8. A system of e-banking should be adopted for depositing the money by FPS Owners to avoid unnecessary expense on part of FPS dealers in making payment by DD and to reduce the number of visits to the concerned office.

    • 9. The records of BSFC regarding lifting of foodgrain from FCI, receipt of same at BSFC godown and distribution to FPS shall be computerized and made online so that there is transparency in allocation process.

    lxxviii

    Chapter 4 TRANSPORTATION

    • 4.1 The Bihar State Food & Civil Supplies Corporation Ltd. (BSFC) is the agency responsible for lifting the food grain from the FCI godowns and storing it for further distribution to the Fair Price Shops (FPS). During the meetings with the officers of the BSFC it was stated that there have been many cases of transport contractors indulging in diversion of food grain. In such cases the transporter is immediately suspended, a show cause notice is issued. Where the transporter is found indulging in malpractices his security is to be forfeited, penalty has to be imposed, F.I.R. is to be registered and agreement is cancelled. The officials however, admitted that there have been hardly any cases where action had been taken against the transporter under the Essential Commodities Act, 1955.

    • 4.2 An official also informed the Committee that ‘rangdari’ was being charged at the rate of Rs. 400-500/- per truck at various places by hoodlums which had to be paid by the transporter. He specifically mentioned that at the FCI godown at Mukama the trucks are not allowed to proceed by hoodlums unless they are paid ‘rangdari’ by the transporter. The question is as to how the transporter would recover the amount. The immediate reply was that the transporter off loads some bags of food grain and sells them in the market. When this fact was told to the District Magistrate, he stated that action was being taken against the miscreants.

    • 4.3 The District Magistrate Muzaffarpur informed the Committee that there were many incidents of diversion when food grain is transported from the FCI godown in one district to the BSFC godown in another district. The Committee was informed that almost 30% of the storage capacity of FCI in the State is concentrated in the

    lxxix

    districts of Patna, Gaya, Muzaffarpur and Buxar. The Assistant General Manager (Storage) FCI informed the Committee that acute storage crisis was being felt and as such the matter was reported to FCI head quarters & the Ministry. A high level committee has now given approval for construction of 2 Lakh MT covered capacity godowns at different locations.

    • 4.4 The BSFC hires transporters through tenders. Notice for inviting tenders is published in the newspapers. The tenders received in the office of the BSFC are sent to the District Transportation Committee. The District Magistrate heads the committee. The District Manager BSFC is the convener and the District Supply Officer and all SDOs’ of the district are its members. The committee recommends the names of 2-3 transporters. The Chief of Procurement then selects one name and the Managing Director of the BSFC finally approves the same. The contract with the transporter is for one year and can be extended for another year if the performance of the contractor has been good.

    • 4.5 The Committee was informed that there is a constant problem in hiring the transport contractors. In Patna tenders had been issued 4 times yet no person came forward to apply for the tender. The reason given for this was that the rates at which the tenders were issued were very low. In Muzaffarpur district there were only two contractors and both had been blacklisted. In the districts where there is no transport contractor the BSFC has to make its own arrangements for transporting food grain from FCI godown to its own godown. The Assistant Godown Manager (AGM) in-charge of the BSFC godown hires trucks at the approved rates of BSFC whenever required. These rates are obviously higher than the contract rates.

    lxxx

    • 4.6 No official of the BSFC accompanies the trucks carrying food grain from the FCI godown to the BSFC godown. The Fair Price Shop owner takes the delivery from the BSFC godown and it is his responsibility to take the food grain to his shop.

    • 4.7 The Committee found that there is an acute shortage of AGMs’. Each AGM has more than one godown in his charge. He is also required to be present at the time of lifting from the FCI godown. As the AGM can not be present at the FCI godown and at the godowns in his charge it causes delay in delivery of food grain to the FPS who have to lift the food grain from his godown.

    • 4.8 The FCI allows 50 days for lifting the allocation for any month. The transporters however complained that the BSFC does not give them more than 15 days. In some cases the quantity of grain exceeds 1,00,000 quintals and there is always a chance that some allocation may lapse due to the inability of the transporter to lift the grain in time on account of non-availability of sufficient number of trucks.

    • 4.9 The BSFC is required to give lifting programme to the transporter at least one day in advance so that he is able to arrange required number of trucks commensurate with the quantity to be lifted. One of the transporters pointed out in a public meeting that the lifting programme is not given to them in advance. They are made to wait till 4 pm. As a result the truck reaches BSFC godown late in the evening and the stock can not be unloaded on the same day. The truck is stranded at the godown till the next morning. If they have 50 trucks they are given lifting programme for 20 trucks and if they bring 20 trucks the programme is given for 100 trucks. In short the officials do not permit efficient working till ‘nazarana’ ranging from Rs.300-1000/- is paid. He also complained that the labour at the

    lxxxi

    godowns also blackmails the transporter and charges Rs. 500/- per truck for properly loading the gunny bags in the trucks.

    • 4.10 The President of the FPS Dealers Association, Bihar alleged that any money paid by the transporter is taken by him forcibly from the AGM who collects it from the FPS dealer. He also alleged that the transporters have to pay extra money/ bribe to the loaders as the loaders form unions and labourers from outside are not allowed to work in FCI godowns. Moreover, bribes also have to be paid to the weigh bridge operator at the FCI godown.

    • 4.11 Recommendations

      • i) A proper vigil has to be kept on transportation of the Specified Food Articles (SFA) from the Godowns of FCI upto the Fair Price Shops. GPS system can be used for tracking the movement of Trucks carrying foodgrains. For this, routes that have to be followed by Trucks carrying SFAs are to be prepared and specified. Devices required for GPS should be installed on every such Truck and movement of the Truck should be monitored. Attachment of device of GPS in the Trucks engaged in Public Distribution System may be made part of the tender conditions.

    ii)

    The State of Chattisgarh has successfully adopted the system of GPS in the State. Similarly, Indian Oil Corporation is also using this technology for the Trucks deployed by it. Similar system can be adopted for Bihar. The system may be procured, installed, operated and maintained by Department or these may be outsourced to an outside private agency through an open tendering process.

    iii) There should be routine daily physical checking of the GPS Units to detect any tampering etc. Any tampering with GPS system installed on the Trucks carrying SFAs or any deviation of the Truck from the

    lxxxii

    route prescribed should be considered as violation of the Public Distribution System (Control) Order, 2001.

    iv)

    The bags carrying

    wheat and

    rice should

    bear the

    name of

    the

    scheme as Antyodaya, BPL, and Annapurna etc. before delivery

    from FCI.

    • v) The trucks carrying the food grains from BSFC godown to Fair Price shop should have a banner having name of District, Block and scheme for which food grains are meant for so that diversion could be checked.

    vi) The tenders should be issued at realistic rates keeping in view the actual cost of transportation. BSFC has to pay higher charges if there is no transport contractor. In any case, if the contractor is paid less he is likely to make up his loss by diversion.

    vii) Each godown must have a full time in-charge. A separate official should be deputed for lifting the food grain from FCI godown. Lifting programme should be provided to the transporter at least one day in advance to enable him to arrange for the requisite number of trucks.

    viii) There should be “Zero tolerance” in cases of breach of contract committed by Transporters. Deterrent monetary penalty should be imposed against the errant Transporters. In the event of even a single breach resulting in diversion of SFAs, not only should the Bank Guarantee be forfeited but also the Transporters should be blacklisted for a specified number of years along with monetary penalty. Apart from the errant Transport Contractor, immediate stringent deterrent action should be taken against officials working

    lxxxiii

    in

    the

    Department, in cases where a

    prima facie

    case

    of their

    involvement in an incident of diversion is made out.

    ix) It is relevant to point out here that the Planning Commission provides funds under its plan programmes for strengthening the operational machinery of Public Distribution System. 9 The funds are, inter - alia, provided for schemes for purchasing mobile vans/Trucks for distributing essential commodities, where static/regular Fair Price Shops are not found viable/feasible. This facility of mobile Fair Price Shop, the Committee feels, can be availed of for providing SFAs in areas where the number of food cards/ration cards does not justify opening of a Fair Price Shop as per the norms or where the FPS has been suspended.

    • x) Proper Distribution of PDS commodity needs timely issue and lifting of foodgrain, monitored transportation, proper weighment and packaging of foodgrains to ensure that issued quality and quantity of foodgrain reach the beneficiary. The Committee suggests that foodgrains can be issued in non-pilferable tamper proof bags and if possible smaller packs of 5-10 Kg to minimize leakages and ensure full supply to beneficiary.

    xi)

    As recommended, in all the other reports submitted by the Committee, it is without exception that all godowns of the FCI and the BSFC should have a electronic weighbridge, irrespective of whether they are hired by the FCI or self-owned. Further, the FCI Godowns should issue Weight Check Memos to all the trucks which are lifting the stock from the FCI Godowns.

    9 Extract of Report of the Working group on PDS and food security for the 10 th Five Year plan (2002-2007)

    lxxxiv

    Chapter 5 MODE OF APPOINTMENT OF FAIR PRICE SHOP DEALERS

    5.1 The Government of Bihar Government, under the Public Distribution System (Control) Order, 2001 and other provisions of law, issued notification dated 15.02.2007, with the prior concurrence of the Central Government. The notification provides for issuance of licence to FPS dealers, suspension and cancellation of licence, terms and conditions regulating the sale and distribution of PDS commodities. The procedure for appointment of FPS dealers as given in the said notification is as under:-

    • 1. Every application for the grant of licence shall be made to the respective licensing authority in the prescribed form. The licensing authority shall ensure proper verification through Block Supply Officer/ Supply Inspector and shall forward its report to the District Level Selection Committee for consideration.

    • 2. The Selection Committee shall consist of the following officers –

    Chairman

    - The District Magistrate.

    -

    Secretary

    The Special Officer Rationing for Rationing

    Members

    Area Patna, ADM (Supply) Patna for Patna district and for remaining districts, the District Supply Officer/ Incharge District Supply Officer. - (i) The Sub Divisional Officer of respective Sub Division; (ii) Any schedule caste/ schedule tribe officer posted in the district.; (iii) The District Co-Operative Officer.

    • 3. The Licensing Authority shall issue the licence to Fair Price Shop under Public Distribution System on the application recommended by the above selection committee.

    • 4. The following

    facts

    are

    to

    be

    taken

    into

    consideration

    for

    appointment of licences of the Fair Price Shops -

    lxxxv

    • (i) 1350 population in Urban Areas and 1900 population in Rural Areas have been fixed as one of the criteria for appointing new licencees under the Public Distribution

    System. (ii) The Consumer should not be made to travel more than two kilometers for accessing the Fair Price Shop both in Urban and Rural areas.

    (iii)

    For remote and inaccessible areas, specially those dominated by Scheduled Caste/ Scheduled Tribe Fair Price Shop may be appointed for a population of 1000.

    (iv) Reservation in allotment of Fair Price Shops are as follows

    Scheduled Caste

    -

    -

    -

    16 Percent

    01 Percent

    18 Percent

    Scheduled Tribe

    Most Backward Class

    Backward Class -

    12 Percent

    Women Backward Class-

    03 Percent

    The above mentioned reservations are applicable only to future

    vacancies and are applicable at the Sub Division level.

    • 5. Priority is to be given to the following category of people in issuance of new licences

      • (a) Self Help Groups

      • (b) Gram Panchayats

      • (c) Co-operative Societies

      • (d) Women/ Co-operative societies run by women

      • (e) Ex-Army Co-operative societies

      • (f) Handicapped

      • (g) Educated unemployed

      • (h) Preference should be given to the applicant who is resident of concerned Panchayat or Ward.

  • 7. Compassionate Cases: -

  • On priority basis wife/husband, son,

    unmarried daughter, daughter in law, widow of deceased son are allotted shops.

    • 8. Restriction on allotment of shops

    lxxxvi

    (a)Shops shall not be allotted to more than one member of a joint family. Mother, Father, Brother, Sister-in-law, Wife, son, Daughter-in-law, Step Brother, shall be considered to be under the definition of one family. (b)Elected Mukhia, Sarpanch, Ward Member, Panchayat Samiti member, Zila Parishad member, M.L.A., M.P., Member of Municipal Corporation and Municipality till their tenure.

    • (c) Floor Mill owner.

    • (d) Lunatic, or is of unsound mind and undischarged

    Minor,

    insolvent.

    • (e) shall

    Applicant

    not

    be

    given licence

    if he/she

    is

    finally

    convicted under Essential Commodities Act, 1955.

    • (f) If applicant holds the post of profit in the Government.

    9.

    The licence is issued for a period of five years on payment of a licence fee of Rs 400/- and is renewed for five years at a time on payment of similar fee.

    5.2 Observations and Findings

    1.

    The

    Committee perused some files pertaining

    to

    the grant

    of

    licences in the various districts. Almost all of the cases related to

    the grant of licences were on compassionate grounds.

    2. The Committee is of the view that a dealer is merely a licencee for a fixed period. The FPS owners claim that they are not earning sufficiently from the FPS and sometimes they even incurr a loss. In such circumstances, it is difficult to understand why licences should be given to the family members of the deceased FPS owner on compassionate grounds and pass on the loss. The FPS licence is not a largesse. The reason for getting shops on compassionate grounds are not far to seek. It is the earning from the black market which attracts applications for FPS licence.

    3.

    The

    Committee

    also

    finds

    that

    there

    is

    no

    provision

    in

    the

    Notification to advertise the vacancies so that deserving persons

    can apply for licences. There is no provision for informing the public

    if

    any vacancy arises for

    an

    FPS

    in

    any

    area.

    In order

    to bring

    lxxxvii

    transparency in allotments of FPS it is necessary that provision should be made to advertise the vacancies.

    • 4. The Committee also noted that the appointing authority for an FPS licence is the SDO. He is an officer of the rank of a Sub Divisional Magistrate. He has to make the appointment on the basis of the recommendations of the Selection Committee headed by the District Magistrate and of which he himself is a member. Thus, the appointing authority has no discretion in the matter of appointment and merely acts as a post office to forward the applications to the selection committee and issue the appointment order.

    • 5. Any person aggrieved by an order of the Licensing Authority denying the issue or renewal of licence to the Fair Price Shop owner or cancellation of the licence can appeal to the Appellate Authority.

    • 6. The Appellate Authority notified by the State Government is the District Magistrate/Collector who is the Chairman of the Selection Committee also. Thus the appeal goes to the same person who has virtually made the appointment. This is against the principles of natural justice. The Committee is of the view that the appeal against the orders of the appointing authority should be heard by an officer who is/ has been a District Judge/ Additional District Judge in the State of Bihar.

    • 7. It is no secret that an FPS dealer can not honestly earn enough to sustain himself and his family. To avoid running into losses he indulges in black marketing. Study of the Committee shows that merely increasing the commission will not result in making the FPS a profitable or viable proposition. The Committee is of the view that the concept of stand alone FPS should be changed. It should be in the condition of FPS licence that he runs a kirana/ grocery shop. He

    lxxxviii

    should be permitted to sell all items except non PDS rice and wheat. This way the FPS owner can earn profit and the shop will remain open through out the month. Moreover attached number of cards means a set number of customers in any case and it will not be necessary to put any condition in the licence to keep the shop open during particular hours or to observe a particular day as a holiday.

    8. It is a well documented fact that the FPS owner is in business for the purpose of diversion or for political influence or other influence that he can wield by being an FPS retailer. There is massive corruption woven around it where the participants are the shop keeper, officials of the Department / Corporation, transporters and last but not the least the politicians. The Committee is of the view that the reservation for various categories provided in the notification dated 15.2.2007 appears rather unnecessary. FPS licences should be allotted to persons of the locality who are already running kirana/ grocery shop or have the capability to do so.

    9. Though there is a clamour for allotment for FPS, the FPS does not rehabilitate or support sustenance of any category or gender. It rather breeds corruption.

    10.

    The

    Committee came to know that there

    is

    no system by

    which ration cards are attached to a particular FPS. It ranges from

    as low as 124 to as high as 1567. The Committee was not appraised

    of any reason

    for

    such

    big

    difference

    in

    rationalization of FPS is must.

    number.

    Thus,

    lxxxix

    6.1

    Introduction

    Chapter 6

    VIABILITY

    • 6.1.1. Viability of FPS is linked with the rate of commission to be paid to FPS dealers. The Committee discussed the issue of viability with FPS owners and their associations, government officials and also invited written suggestions from the public.

    • 6.1.2. Viability

    of

    Fair

    Price

    Shop

    is

    critical

    to

    sustenance of Public

    Distribution System and to minimize leakages of PDS grains. The number of ration cards attached to FPS in each category, offtake of grains, margin on commodities, cost incurred on transport and handling, rents etc. are the determinants of viability of Fair Price Shops.

    • 6.1.3. Programme Evaluation Organisation under Planning Commission in its evaluation Report on TPDS defined Viability of FPS to mean an annual return of 12% or more on the working capital. 10

    • 6.1.4. Average gross income of an FPS is calculated as an average of the total margins generated from the sale of sugar, kerosene, rice and wheat (APL, BPL, AAY) and other receipts out to the sale of gunny bag in which PDS grains are packed and sent in to the FPS.

    • 6.1.5. The PEO report, 2005 brings out the importance of kerosene in the income composition of the FPS. The Report states that the income from kerosene almost equals the combined share of income generated from sale of BPL rice and wheat and thus speaks of the importance of keeping kerosene within the PDS retail trading to improve their viability.

    10 PEO, Performance Evaluation of Targeted Public Distribution System- 2005, (at pg vi and 50).

    xc

    • 6.1.6. The Committee has observed that many factors affect the viability of FPS. Some of these are -

      • i. Severe delay in supply of the Essential Commodities

    ii. Losses suffered by FPS dealers due to blockage of working

    capital invested for the stock for long periods.

    iii. Losses suffered on account of short supply of goods. iv. Unequal distribution of ration cards.

    • v. Various recurring costs like transport, rent, electricity, loading charges etc.

    • 6.2 Existing System

    6.2.1 Para 3(1) of the Annexure read with clause 5 of the PDS Control Order, 2001 states that the Central Government is to make food grains available to the State Government at a particular price that is specified from time to time.

    6.2.2 The State Government adds its administrative charges on the central issue price and allocates these food grains to the fair price shop at the prescribed rates. The fair price shop dealer sells the food grains at the rate prescribed by the State Government. The Government of Bihar vide its order dated 03.10.2007 has fixed the sale price for rice and wheat for BPL and APL families. The table underneath would give a general view on the prices at which the State buys from the Centre and the price at which a fair price shop dealer is bound to sell the food grains to the consumers -

     

    BPL

    APL

     

    Whea

    Rice

    Whea

    Rice

    Rice

    t

    t

    (Ordinary)

    (Grade

    A)

    Central

    415.00

    565.0

    610.0

    795.00

    830.00

    Government issued price (FCI)

    0

    0

    1% VAT

    4.15

    5.65

    6.10

    7.95

    8.30

    3% Other taxes

    12.45

    16.95

    18.30

    23.85

    24.90

    BSFC Handling, Transportation Margin Money

    35.00

    35.00

    21.00

    22.60

    22.60

    xci

    etc.

    BSFC issue price

    466.6

    622.6

    655.4

    849.40

    885.80

    0

    0

    0

    Commission of FPS Dealers

    25.00

    25.00

    14.80

    24.30

    24.30

    Reimbursement to FPS Dealers towards transportation expenses (till 15 kms)

    4.00

    4.00

    3.50

    3.50

    3.50

    Consumer End

    495.6

    651.6

    673.7

    877.20 or

    913.60 or

    Price per quintal

    0 or

    0 or

    0 or

    Rs. 8.78

    Rs. 9.14

    Rs.

    Rs.

    Rs.

    per kg

    per kg

    4.96

    6.52

    6.74

    per

    per

    per kg

    kg