The Comptroller and Auditor General (CAG) reports presented to parliament during the Monsoon Session that ended last week have found irregularities in the working of Khadi units, poor monitoring by the Tea Board, and non-approved sanctioning of funds for the Swadesh Darshan scheme, along with poor estate management by the Bharat Sanchar Nigam Limited.
In part two of The Wire‘s series on all 12 CAG reports presented in parliament, we look at findings from four reports:
- Ministry of MSME: Compliance Audit on “Departmental Trading Units including Supply Chain Management in Khadi and Village Industries Commission,”
- Performance Audit on “Swadesh Darshan Scheme” of the Union Government’s Ministry of Tourism,
- Performance Audit on “Role of Tea Board of India in Development of Tea in India” of the Union Government’s Ministry of Commerce and Industry, and
- Compliance Audit on Finance and Communication, Union Government.
Less than 20% khadi units working
The CAG report on Departmental Trading Units Including Supply Chain Management in Khadi and Village Industries Commission under the Ministry of Micro, Small and Medium Enterprises (MSME) has found that less than 20% of departmental trading units were operational.
The Khadi and Village Industries Commission (KVIC) was formed by the Union government under the Khadi and Village Industries Commission Act of 1956 to plan, promote, facilitate, organise and assist in the establishment and development of Khadi and village industries in rural areas in coordination with other agencies engaged in rural development wherever necessary.
The departmental trading units were established by KVIC to carry out production and sales activities of Khadi and village industries products.
The CAG report is based on an audit conducted for the period from 2017-18 to 2020-21.
“KVIC had established 92 Departmental Trading Units over the years. Of these, only 18 Departmental Trading Units were functional as on 31 March 2021 and 74 Departmental Trading Units have become defunct over a period of time (73 Departmental Trading Units became defunct during the period 1962-2016 and one Departmental Trading Unit was closed in 2019),” the report said.
The report said that despite the fact that only less than 20% of departmental trading units were able to continue operations, “KVIC has not done any analysis to identify the reasons” behind them becoming defunct.
It added that the reason for closure was not available for 11 out of 25 departmental trading units.
“In case of three departmental trading units, the reasons and justifications of closure were not fully convincing and more efforts by KVIC could have prevented their closure,” it said.
“In case of another two departmental trading units, private parties were generating considerable revenue through unauthorised sales of Khadi products indicating scope for revenue generation through these departmental trading units.”
The report also found that the Khadi Gramodyog Bhavans of KVIC were collecting excess share of production subsidy due from the Khadi Institutions whose products were being sold through them.
While marking the 8th National Handloom Day on August 7, prime minister Narendra Modi said that “the demand for Khadi clothes is increasing in India and abroad,” reported the news agency PTI.
The CAG report has found KVIC was “‘unable to fulfil the demand in respect of wholesale/Government requirements due to lack of suppliers” and has recommended that KVIC take effective action to “augment the capacity of existing suppliers.”
It also recommended inducting more suppliers to increase the capacity to cater to the demand in the Government sector.
Ministry of Tourism sanctioned funds for Swadesh Darshan scheme without Cabinet approval
A performance audit of the Swadesh Darshan Scheme implemented by the Ministry of Tourism was conducted from the period from the Scheme’s inception in January 2015 to March 2022.
The report said that while the scheme was launched with an initial outlay of Rs 500 crore, the Ministry continued to sanction projects and the amount sanctioned had exceeded Rs 4,000 crore by 2016-17.
The funds were sanctioned by the ministry “without obtaining approval of the Cabinet, which was necessary for sanctioning projects costing above Rs 1,000 crore.”
The report added that the scheme was implemented “without conducting any feasibility study.”
The report said that the ministry identified 15 tourist circuits for development under the scheme and a total of 76 projects were sanctioned under the scheme since its inception.
“Non-preparation of the feasibility report resulted in poor identification of sites and deficiencies in execution of projects, such as delay in completion of the projects and non-utilisation of funds,” it said.
The report said that the rural circuit did not receive adequate attention from the ministry.
“As on 31 March 2022, the total expenditure incurred under rural circuit was only Rs 30.84 crore, which constituted only 0.73% of the total expenditure incurred under the Scheme.”
The report also found that the ministry did not develop a formal mechanism for evaluation and approval of projects.
“While 18 months to 36 months had been given to the State Governments/UTs to complete the projects, the Ministry itself kept the project proposals pending for up to six years in few cases without any action as it did not have a defined timeline for approval or rejection of project proposals,” it said.
The audit also found that there was a lack of “proper planning on the part of the Ministry” as it did not ensure the preparation of a national or state-level plan before launching the scheme.
Even after the scheme was launched, it did not ensure preparation of detailed perspective plans for 14 out of 15 tourist circuits/themes, which were to form the basis of selection of projects and preparation of detailed project reports.
“Thus, the Ministry did not have any long-term vision/policy for implementing the Scheme,” it said.
‘Poor’ monitoring, ineligible subsidy payments by Tea Board indicate ‘corruption/fraud’
The CAG report on Role of Tea Board India in development of tea in India has recommended that the Tea Board initiate steps to investigate the cases of ineligible subsidy payments as these indicate “corruption/ fraud”.
The Tea Board was authorised by the Tea Act, 1953 to inspect the quality of tea.
The audit on the role of the Tea Board was conducted during November 2021 and April 2022 covering the period from 2016-17 to 2020-21.
The audit recommended that Tea Board should earmark stipulated budgetary allocation for Scheduled Caste Sub Plan and Tribal Area Sub Plan-intended to channel the flow of resources from the general sectors in the Central Ministries/ Departments towards the development of Scheduled Castes and Scheduled Tribes, at least in proportion to their numbers in the population, both in physical and financial terms.
“Planning Commission/ NITI Aayog directives provide for mandatory allocation of funds as 4.5% for Scheduled Caste Sub Plan during 2016-17 which was increased to 8.3% from 2017-18 onwards. However, Tea Board allocated only 3.29 per cent for Scheduled Caste Sub Plan scheme.
“Further, allocation towards Tribal Area Sub Plan scheme was only 2.63 per cent against mandatory allocation of 4.3 per cent during 2018-19 to 2020-21,” the report said.
The report found that in Assam, the Golaghat Regional Office under Guwahati Zonal Office of Tea Board disbursed subsidies under Scheduled Caste Sub Plan and Tribal Area Sub Plan schemes “without proper inspection or verification of the requisite documents, which indicated serious systemic lapses and resulted in many ineligible payments of subsidies.”
“In light of the above, it is recommended that Tea Board should earmark stipulated budgetary allocation for Scheduled Caste Sub Plan and Tribal Area Sub Plan.
“The Board may also initiate steps to investigate the cases of ineligible subsidy payments as these indicate corruption/ fraud and accordingly, responsibility may be fixed, and an appropriate action may be taken.”
The report also found that Rs 1.55 crore lying in the bank account of one beneficiary who could not set up a new factory within the time frame stipulated in scheme guidelines.
“However, no recovery was initiated by Tea Board. Further, Tea Board disbursed excess subsidy of Rs 2.05 crore to 23 tea estates for creation of irrigation facilities for areas exceeding the approved limits as per scheme guidelines,” it said.
Amid rising instances of distress to tea garden workers, the audit has also found that as of March 31, 2021, 15 big gardens of north and south India remained closed affecting the livelihood of 12,039 permanent and 4,480 temporary workers.
The general reasons for sickness or closure were attributed to “poor garden management practices, falling quality and price realisations, labour unrest, lack of development perspective, high debt-oriented funding strategy, ownership disputes etc,” it said.
The report found that the Tea Board had not adequately inspected factories during 2016-17 to 2020-21.
“The shortfall of inspection ranged between 78.62% and 91.95% which showed poor monitoring on part of Tea Board,” the report said.
The report said that the Tea Board is meant to direct its officials to collect tea samples from the manufacturing units and send them to authorised laboratories for testing for quality assurance, once in six months.
The audit found that there was a shortfall in sample collection ranging between 84%and 97% during the audit period indicating “poor monitoring.”
The report also found that small tea growers contributed towards more than 50% of total tea production in 2020-2021.
But in the absence of a well-defined strategy for identification and registration of the small tea growers, 38% of small tea growers were not registered as of March 2021 and were out of the ambit of Tea Board’s regulatory activities and developmental assistance.
One hundred and nineteen out of 1,573 big tea growers were not registered as of March 2021, the report said.
The report added that the illegal practice of mixing Nepal tea with Darjeeling tea is still continuing “which would ultimately dilute the quality of world-famous Darjeeling tea.”
Non/short payment of GST by Department of Post worth Rs 42.48 crores
The CAG report on the Compliance Audit on Finance and Communication, Union Government contains significant findings from the compliance audit of the Ministry of Communications, Ministry of Electronics and Information Technology, and Ministry of Finance.
The report found that the Department of Posts (DoP) under the Ministry of Communication did not formulate a conservation policy of its own to meet the requirements of protection and conservation of Heritage Buildings.
“The funds allocated to the Department for its mandated activities were inadequate. Inadequate planning and poor management, coupled with the absence of periodical physical verification further aggravated the dilapidated condition of the Heritage Buildings. Thus, the Department lacked the required sense of purpose and an appropriate strategy for the conservation and protection of its Heritage Buildings,” it said.
The report said that the DoP had incurred non- or short-payment of GST amounting to Rs 42.48 crores during the period from 2018-19 to 2021-22.
It said this was because DoP “failed to issue instructions to its subordinate offices to pay the GST on reverse charge basis on the commission paid to its sales force for procurement of Postal Life Insurance/Rural Postal Life Insurance policies which resulted in non / short-payment of GST amounting to Rs 42.48 crore during the period from 2018-19 to 2021-22.”
It added that the DoP also failed to segregate the financial assistance received from UIDAI on Aadhaar related services between its own revenue and Goods and Services Tax (GST) component which “resulted in non/short-payment of GST amounting to Rs 9.00 crore for the period from May 2018 to July 2022.”
The report found that “poor/inefficient planning coupled with ineffective monitoring” by the Ministry of Electronics and Information Technology (MeitY) led to wasteful expenditure of Rs 21.83 crore on establishment of the Electronics Test and Development Centre (ETDC) Ajmer.
The centre is meant for test and calibration of large area solar photo voltaic panel and telecom equipment.
The audit also found that the Bharat Sanchar Nigam Limited or BSNL under the Ministry of Communications which is in possession of substantial land and real estate holdings, has not instituted a comprehensive Estate Management Policy.
Despite assurances to the Public Accounts Committee (PAC), “BSNL has incomplete records of ownership of its real estate, hindering utilisation of its assets through sale or rental.”
The report also said that BSNL procured 6,000 Aadhaar Enrolment Kits during 2018-19 worth Rs 77.88 crore. “Out of them, 3,941 kits remained non-operational till December 2022. This resulted in blockade of Government funds of Rs 51.15 crore,” it said.
Read part one of the series here.