Third-party audit into Rs 31,000-crore CCL mess a non-starter

A year on, a third-party audit ordered by the Capt Amarinder Singh-led Congress government in Punjab into the Rs 31,000-crore cash credit limit (CCL) mess is a non-starter.

The state government, which announced the audit last year for physical and financial verification of foodgrains between April 1, 2004 and March 31, 2017, is still to even find an auditor.

“The food and civil supplies department floated a request for proposal (RFP) eight months ago, inviting bids from independent auditors for the intensive exercise, but did not get much response,” said a senior officer in the know of the matter who did not want to be identified.

The department received a lone bid from a Mumbai-based audit firm in response to the RFP, but that firm did not meet the technical specifications. Finance minister Manpreet Singh Badal had in June 2017 announced the audit of the Rs 31,000-crore gap in the food credit legacy account after several Congress legislators demanded a probe by the Central Bureau of Investigation (CBI), alleging irregularities and mismanagement in procurement.

The cash credit limit (CCL) is given by the Centre to the state for procurement of foodgrains for central pool, and the huge gap arose because of a mismatch between cash credit availed and the foodgrain stocks in the account books of the state procurement agencies since 2004.

The entire liability of CCL has fallen on the fund-crunched state government, leaving its finances in tatters, as the previous SAD-BJP government signed an agreement with the Union finance ministry on March 10, 2017, a day before the assembly election results, to settle the unresolved amount by paying Rs 3,240 crore a year for the next 20 years — a total of Rs 64,800 crore.

The Punjab Governance Reforms and Ethics Commission (PGREC) headed by former chief secretary KR Lakhanpal last month recommended a “thorough probe” into the CCL gap and its settlement for fixing the responsibility. A cabinet sub-committee on governance reforms headed by chief minister Capt Amarinder Singh will take the call on the recommendation.

In the meantime, the food and civil supplies department has sent a proposal to the finance department for engaging the Institute of Public Auditors of India (IPAI), a society comprising retired officers of Indian Audit and Accounts Services (IA&AS) and others, for the third-party audit. However, no decision has been taken so far.

“The main objective of the audit exercise will be to ascertain how the liability of this magnitude arose, and to fix responsibility of those who allowed this mess to continue. It will be an exhaustive exercise requiring scrutiny of documents across multiple state procurement agencies,” said the official.

The finance department, in its white paper on state finances released last year after the Congress government took charge, raised questions over the settlement. “This (settlement as loan) was done even without the elementary precaution of going into the reasons for the emergence of such a huge gap and fixing responsibility of the officials of the state procurement agencies,” it said.