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Report No. 31 of 2015 - Performance Audit on Procurement and Milling of Paddy for the Central Pool Union Government, Ministry of Consumer Affairs, Food and Public Distribution

Date on which Report Tabled:
Tue 08 Dec, 2015
Date of sending the report to Government:
Government Type:
Union
Union Department
Civil
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Sector -

Overview

Why did we select this subject for Audit?

The Government of India (GoI) spends huge amount of money for supply of rice under Targeted Public Distribution System (TPDS). The milling charges were fixed by the GoI long back in 2005, on the basis of recommendations of the Tariff Commission of India and since then the milling charges have not been revised. However the rice millers are still carrying out the milling operations at milling charges fixed in 2005, without any demand for increase in the milling charges even though the cost of milling has increased. Significantly, the selling price of the by-products i.e. rice bran, broken rice and husk generated in the milling process, has increased substantially. There were also concerns regarding payment of Minimum Support Price (MSP) to farmers, revision of milling charges for paddy and non-delivery of rice. Accordingly, this Performance Audit was conducted to examine such issues along with the effectiveness of monitoring and control processes at various stages.

What were our audit objectives?

The performance audit was conducted to evaluate whether:

  • the rates of various incidentals, including milling charges, in the cost sheet were fixed in a transparent and economical manner;
  • the system of selection of millers was sound, linkage of mandis with rice mills was economical and allocation of paddy to rice millers was carried out efficiently;
  • the system of ensuring quality and quantity of paddy/rice procured for the Central Pool was effectively implemented;
  • the terms and conditions of Milling Agreements/Levy1 Orders were duly complied with; and
  • the monitoring and review mechanism for procurement of paddy, storage, milling and up to the stage of delivery of rice was adequate and effectively operationalised.

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