The other scam you forgot about

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The Karnataka Lokayukta’s report on the PDS mess is as damning as the mining scam revelations, says Rohini Mohan

Photo: Shailendra pandey

DESPITE WHAT our reel-life heroes have shown us, perhaps it’s only possible to fight one villain at a time. Still, in his last few days on the job, Karnataka Lokayukta Santosh Hegde tried to battle two evils, with two reports that presented damning evidence of corruption in the BJP government. The first report, on illegal mining, had enough firepower to systematically dig holes in the state government. The second report, unfortunately, has been overshadowed by the sheer political drama of getting the otherwise immovable CM BS Yeddyurappa to resign.

Submitted to the chief secretary a day before the mining report, a probe into the public distribution system (PDS) in the state shows massive corruption and inefficiency in the distribution of foodgrain. While the state lost about Rs 1,800 crore per year through illegal iron ore trading, it also lost about Rs 1,738 crore a year through the PDS.

In September 2010, Hegde appointed Mysore-based anti-corruption activist and founder of Swami Vivekananda Youth Movement Dr R Balasubramaniam to probe the alleged irregularities in the PDS. By collecting secondary data and doing field investigations in all 30 districts, Balasubramaniam found that a little above 49 percent of those receiving subsidised rice and wheat under the below poverty line (BPL) quota, were ineligible. Every month, an average of Rs 54.4 crore subsidy was spent on families that no longer existed, foodgrain amounting to Rs 56.6 crore was lost in leakages and Rs 24.5 crore was spent on people who weren’t poor at all.

This staggering diversion of funds cannot be explained simply by inefficiency and systemic corruption. The devil lies in the dirty policy. In December 2008, the government announced a short-term programme: anyone producing a self-declared affidavit of poverty by March 2009 would be given BPL cards. If a person stood in line at the district Nemmadi Kendras (relief centres) and said he was poor, he would receive a BPL card. Without proof of income, possessions or calorie intake. The BJP government had simply bypassed every single method of determining poverty.

A Department of Food and Civil Supplies official admits that they were to verify the poverty claims later, but this was not followed through. “What’s the point when the cards are already given?” he contests.

Balasubramanian points out that the BPL cards were given out just a few months before the 2009 Lok Sabha election. “The whole process of identifying the poor was reduced to political gimmickry,” he says.

Nemmadi Kendras are set up by the eGovernance department for providing 43 kinds of services including widow pension, birth and death certificates, domicile certificates, etc. The 136-page PDS irregularities report explains that these centres gave out 1.6 crore cards (APL + BPL), while the state’s population is only 1.2 crore families. This means subsidies were drawn and foodgrain accounted against 40 lakh ghost cards for families that do not exist.

Grain down the drain

Rs 1,800 cr
Amount lost per year through illegal iron ore trading

Rs 1,738 cr
Amount lost per year through irregularities in the PDS

It gets worse. Even the number of poor families is an overestimation, thanks to the randomness of a self-declaration. The probe calculates that the number of BPL families according to Karnataka’s official poverty assessment criteria is 44 lakh. This is far below the 96 lakh BPL cards the state has given out. The inclusion error was thus 49 percent — every second person who received subsidised foodgrain shouldn’t have.

THE CENTRAL government, on the other hand, according to methods stipulated by the Planning Commission, estimates that there are 31.29 lakh BPL families in Karnataka. Central funds and foodgrain from the Food Corporation of India are allotted accordingly to the state. As the state claims it has 65 lakh more BPL families (it calls it Extra BPL), it must dip into its own funds to meet the excess food security it wants to extend. So when the Centre gives rice at Rs 5.40 per kg to the state, Karnataka further subsidises this by Rs 2.40, so that it can sell rice to the BPL cardholders at Rs 3 per kg. The Centre also gives rice at Rs 8.30 a kg to above poverty line families, but since Karnataka has slotted most of the APL families also as BPL, it is bound to give them rice at Rs 3 a kg too. It does this by spending another Rs 5.30 a kg for APL families. In other words, Karnataka subsidises the rich far more than it does its really poor.

In the shade Hegde submitted the PDS scam report a day before the one on mining
In the shade Hegde submitted the PDS scam report a day before the one on mining
Photo: SB Satish

The takeaway from the PDS irregularities report is not only that undeserving people are accessing subsidies, but also that the really poor are being shortchanged. In fact, there’s an exclusion error of 5 percent. This may seem low but the PDS deprives the poor in another way too.

Since there is only a constant amount of ration (rice, wheat, sugar, kerosene) from the central PDS, the Karnataka government devised a new system to be able to distribute ration to the about 80 percent of its population it had declared BPL. Instead of the per family norm followed in every Indian state, Karnataka introduced a new unit system. One unit is any person who is above 10 years of age. Every unit was entitled to 4 kg of rice, and no family was allowed to claim rice for more than five units, or five family members.

This meant the government never gave more than 20 kg per month to a family, even though the Central law stipulates that every family should get 29 kg rice per month, whether it has five or two members. The Karnataka chapter of the People’s Union for Civil Liberties has challenged this in the Karnataka High court. Last year, the court declared the unit system illegal, but the state has shown no sign of reverting to the family system of food security.

Every month, about Rs 54.4 crore subsidy was spent on families that existed only on paper

The 9 kg extra due to every BPL family does not always fund the extra BPL cardholders in the state either. The PDS report finds that 73 percent of the people surveyed paid bribes to get foodgrain. Fair price shops charged higher rates from the cardholders, and many of them found the shops open only for 5-6 days a month. Even when open, close to 70 percent of the ration shops did not display stock positions on a board outside, as they are supposed to. In a state that considers itself the IT hub of the nation, neither the food distribution nor the inventory is computerised.

Food minister Shobha Karandlaje and Department of Food and Civil Supplies Secretary BA Harish Gowda refused to respond to TEHELKA’s queries.

As he steps down after a turbulent last phase, Hegde says that while the illegal mining report indicts politicians and corporates, the PDS graft should be given equal attention. Both scams have caused huge losses to the exchequer, but “the frauds and wrong decisions in the PDS are being further funded by people’s taxes,” he says.

The graft in Karnataka’s PDS is just the sort of callousness in governance that allows a regime to claim that it cares for its poor, when it does nearly the opposite.

Rohini Mohan is a Special Correspondent with Tehelka.
[email protected]

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