The Comptroller and Auditor General has castigated the Government — specifically the Union Ministry of Food, Consumer Affairs and Public Distribution — for the huge losses incurred by the Government agencies, such as State Trading Corporation, MMTC and PEC, in the import of pulses during the years 2006 to 2010.
The CAG report tabled a few days ago in Parliament clearly brings out the inefficiency and ineptness with which the public sector agencies handled the entire train of transactions — from pulses purchases overseas to physical imports and distribution in the domestic market.
The CAG found that the Government agencies incurred massive losses totalling Rs 1,200 crore because of faulty commercial operations.
no transparency
Importantly, the pulses import business of PSUs lacked accountability and transparency. Rather than advance consumer welfare, their working hurt consumer interest on most occasions, the CAG report remarked.
The damning findings come at a time when the PSUs have stopped importing pulses. But even as the wrongdoings were happening during 2008-2010, Business Line was the first, and perhaps the only, business daily to blow the whistle.
On January 22, 2009, we first reported Government agencies defaulting on pulses import contracts. On August 6, 2009, an article demanded that the ‘Government should monitor commodity trading by public sector companies'.
It urged the Government to define the role and scope of PSU's commercial activities.
Another article on May 8, 2010, again argued in favour of regulating State enterprises in pulses trade.
There were also a couple of editorial comments during 2008 to 2010 making out a case for enforcing operational guidelines for the PSUs in pulses import trade.
On August 21, 2009, an editorial titled ‘Weak Pulse' argued thus: “While imports through the private sector will continue, pubic sector enterprises will have to play a more proactive role in augmenting supplies.
India may need to import about 30 lakh tonnes of pulses in 2009-10. The public sector enterprises need a well-defined roadmap for purchases, inventory and marketing. A centralised planning cell would help them take trading decisions quickly and in a coordinated manner. Indeed, public sector enterprises have to discharge a social responsibility.”
law unto themselves
How faulty marketing policies benefited select large traders in the domestic market was brought out succinctly in the news articles. Of the four large traders named in the CAG report, one has already gone into liquidation. Another is said to be in deep financial mess.
The most unfortunate part of the pulses-import episode through PSUs was that no one monitored their operations, let alone regulate them.
In the international market, the Government agencies were a law unto themselves.
They floated tenders indiscriminately and withdrew them at will; they merrily reneged on contracts; imported inappropriate types of pulses at wrong times and often failed to dispose them of in the domestic market in time or marketed in a manner that advanced the interests of a handful of large traders.
While all these issues were brought out by Business Line during 2008, 2009 and 2010, policymakers in New Delhi did little to intervene or discipline the PSUs.
It is least surprising that the losses amounted to Rs 1,200 crore.
Everyone abdicated responsibility. It was surely possible to substantially reduce the losses with timely intervention by the Government; but no one cared.
The nation has suffered despite timely whistle-blowing.