No procurement info, no funds: Centre - Mandi Gobindgarh News

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Thursday, August 8, 2019

No procurement info, no funds: Centre


No procurement info, no funds: Centre

Ruchika M Khanna
Tribune News Service
Chandigarh, August 7

The Union Government has held back over Rs 1,000 crore due to the cash-strapped Punjab for its failure to get commission agents (arhtiyas) to account for the money given by the Centre to farmers for buying their produce.

While Rs 495.66 crore have been held back from the state procurement agencies by the Food Corporation of India for the wheat crop of 2018-19, another Rs 522 crore has been held back as arhtiya charges for 2019-20. While state agencies have already released the arhtiya charges, the FCI has withheld this amount, pushing up the state’s dues from the Centre to Rs 1,017.66 crore.

This has been done because the arhtiyas have failed to upload information of the farmers whose produce they buy for the Union Government on the Public Financial Management System (PFMS).

The PFMS was introduced by the Centre to record subsidy up to the last beneficiaries, in this case farmers. Sources say all transactions that take place between the Centre and state procurement agencies and between these agencies and the arhtiyas are being recorded on the PFMS. However, the arhtiyas are reluctant to upload the transactions (MSP they pay to the farmers from their accounts). This is because commission agents and farmers have a continuous system of lending and borrowing, and the agents use the payments to be made for their crop as collateral/security against the “frequent loans” they give to farmers.

It may be mentioned that while there is an electronic transfer of funds for buying foodgrain right up to the level of the commission agent, the agent makes payments to farmers through cheques issued to them. Ideally commission agents are supposed to release the payment to farmer within 72 hours of buying the crop. Since arhtiyas deduct a portion of the amount due to farmers as payment for their produce (as instalment for the loan), the arhtiyas are unwilling to implement direct transfer of this subsidy through the PFMS.

Sources in the Food and Supplies Department told The Tribune that because of the money being held back by the FCI, the state procurement agencies have to bear huge interest costs. “This can also lead to gaps in food credit limits, as the RBI policy on food credit limit is clear that all gaps of the previous procurement have to be recouped before a new cash credit limit for the next season is obtained,” says KAP Sinha, Principal Secretary, Food and Supples.

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