CAG pulls up J-K govt for spending Rs 9 crore extra on Sugar procurement

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Srinagar :The Comptroller and Auditor General of India has found that Jammu and Kashmir government has incurred an extra expenditure of over nine crore rupees on sugar procurement.

According to the CAG’s audit report, the Consumer Affairs and Public Distribution department’s failure to procure sugar for public distribution at lowest rates led to the minimum extra of Rs 9.23 Crore on the government exchequer.

According to the report, the State Level Purchase Committee (SLPC) in the Food, Civil Supplies and Consumer Affairs Department, while evaluating (September 2015) tenders for procurement of sugar for the period October 2015 to September 2016 noticed that the lowest bidder had offered the rate of Rs 39,870 per MT.

After negotiations, the bidder agreed on a negotiated rate of Rs 38,600 per MT and the Committee referred the matter to the Finance Department for their concurrence.

The Finance Department declined its concurrence and informed in October 2015 that budgetary provisions for subsidizing sugar could not be increased under any circumstances and the Department needs to consider either re-tendering or find an alternate mechanism for purchase of sugar through some Central Public Sector Undertakings (PSUs) and ensure that price of sugar is equal to or less than the prevailing market rate.

The report said that it was also suggested that the department can devise a mechanism whereby the Central subsidy of Rs 18.50 per kilogram available can be transferred to the eligible consumer’s account and allow them to purchase from open market, which would prevent leakages and reduce the administrative costs. “It was observed from minutes of meeting dated 19.11.2015 that the Directors of Jammu and Kashmir, Food Civil Supplies and Consumer Affairs Department who were members of SLPC expressed their disagreement on direct transfer of subsidy as digitalized, know your consumer (KYC) details of beneficiaries were not available,” the report said.

The audit notice that the instructions of the Finance Department were not followed and the Department extended the existing contract for procurement of sugar at the rate of Rs 36,860 per MT for next three months from October 2015 to December 2015.

“The department procured 20,955 MTs of sugar at the rate of Rs 36,860 per MT during November 2015 to March 2016. Records also showed that the Department had invited (May 2016) e-tenders for procurement of sugar and the lowest bidder had quoted the rate of Rs 43,370 per MT, which was negotiated to Rs 42,900 per MT. However, without seeking the concurrence of the Finance Department before the approval of rate, the department procured 29,940.412 MTs of sugar at the rate of Rs 42,900 per MT during June 2016 to September 2016,” the report said.

The report states that a comparison of procurements made by the department during November 2015 to March 2016 and June 2016 to September 2016 with reference to the rate of Rs 38,600 per MT negotiated with the lowest bidder in the initial tendering process but was not adopted, revealed that the department had incurred an extra expenditure of Rs 9.23 Crore. “Thus, the departmental failure to procure sugar for public distribution at lowest rates led to minimum extra outgo of Rs 9.23 crore on the Government exchequer,” it said.

It was also noticed in audit that against the Central sugar subsidy of Rs 154.55 crore due to the State at the rate of Rs 18,500 per MT for the annual procurement of 83,544 MTs of sugar for Targeted Public Distribution System during October 2015 to September 2016, only Rs 91.76 Crore were received.

“This was owing to the delay in finalizing the procurement. Thus, the State was not only deprived of Central sugar subsidy of Rs 62.79 crore, but also sugar could not be distributed to consumers through targeted public distribution system for around five months,” it added—(KNO)

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