Punjab procurement scam: Overpayment for mandi labour, cartage too

Punjab’s procurement agencies are not only overpaying truck unions for transportation of grains, but also indulging labour unions in the mandis, paying them rates much higher than the prevalent prices.

Other than labour, for cartage — that is, movement of grain within 8 km of the mandi — as well, the agencies up to 80% more than the basic rates fixed.

The scam, reported to the Punjab chief minister Parkash Singh Badal, has been going on for several years now and is causing a loss of hundreds of crores every year to the exchequer. HT on Sunday has already reported how the scam was undertaken in transport of grains, causing a loss of Rs 1,000-1,500 crore a year.

Loading, unloading and stacking

Rules say that the lowest rate paid by any of the five agencies at a mandi must then be followed by the others, as that is the best deal available as per tenders. But, violating the government rules with impunity, agencies paid different rates within the same mandi to labour used through union contractors for loading, unloading and stacking of wheat and paddy bags. And, even when individual private contractors were willing to work for much less, the agencies insisted upon hiring labour union contractors.

The government actually sets a basic rate, and the agencies call for tenders to possibly get it lower than that. For instance, at Khanna mandi in 2012-13 alone, Pungrain managed to get labour at 12% less than the basic rate. Thus, all agencies should have that rate, since it was the lowest available. But Punsup paid the basic rate. Worse, Punjab State Warehousing Corporation (PSWC) paid 21% over the basic; Punjab Agro paid only 9% less; and Markfed paid 10% less.

Thus, all five procurement agencies paid different rates.

At the Ludhiana mandi, even as Punsup got the deal of 27% less than the basic rate, and hence set a low benchmark, the PSWC paid 16% above the basic rate — an unexplained variation.

The next year, the lowest rate was that used by Pungrain in the Machhiwara mandi — 14% below the basic rate. This was followed by the PSWC and Punjab Agro too, but Markfed went ahead and paid 35% above the basic rate in the same mandi.

The insistence on using union contractors is also baffling. In almost all the mandis, non-union, individual contractors were ready to get the labour to work for rates 15-30% below the basic rate. But the agencies were still paying the union contractors 65-90% over the basic rates.

According to the report submitted to the chief minister, during paddy procurement last year, of the total payment of Rs 7.5 crore made to the labour union contractors, over Rs 2.17 crore was in excess. Similarly, during wheat procurement last year, out of the total Rs 2.43 crore paid by agencies to labour unions, over 88.7 lakh was paid in excess.

Cartage: Within 8 km

For cartage, the state government has fixed Rs 231-Rs 427 per 100 bags, depending on the distance the bags have to be carted from the mandi to a storage point within 8 km. As was the case with the labour union contractors and truck unions, the agencies paid different rates in the same mandi for cartage.

In Khanna mandi last year, the lowest rate for cartage was adopted by Pungrain and Punjab Agro — 30% below the basic. According to the rules, the other agencies should have followed this rate. However Punsup, PSWC and Markfed paid much more.

In 2012-13, the agencies paid Rs 23.6 lakh more than what they should have, and last year they paid overpaid Rs 7.8 lakh.

The report concluded that the categorisation of cartage operations into three slabs of distances within the 8km range is misleading, as the rates charged in this category were almost the same as the rates charged for transporting the grain beyond 8km. Interestingly, the report adds that the rates for longer distances (beyond 8km) were sometimes even lower than those for shorter distances!

In fact, for cartage, too, the agencies had the option of hiring non-union, private transporters, but majority of the work was handed over to cartage unions operating through the canter or truck unions, which are helmed or patronised by political leaders. Last year, during wheat procurement, for almost the same quantity lifted by Punjab Agro (2 lakh quintals), cartage union contractors were paid Rs 21.21 lakh while individual contractors were paid Rs 12.5 lakh.

The agencies altogether overpaid Rs 33.5 lakh by hiring union contractors that season.