NEW DELHI July 5: The Central Bureau of Investigation (CBI) is scrutinising several aspects relating to the import of 1.5 million tonnes of wheat by the State Trading Corporation of India (STC) in February this year.For one, even though formal orders for the import of another million tonnes of wheat came on February 27 from the cabinet secretary, the then food secretary BK Taimani held a meeting in the afternoon of February 26 -- with the then chairmen of STC and FCI and the agriculture secretary, Kamal Pandey -- on the logistics of importing a total of 1.5 million tonnes of wheat into the country (The Financial Express, July 3, 1998).
This was apparently unusual. For, the records show that the STC had only bought one million tonnes of wheat from the Australian Wheat Board (AWB) on February 26 and had only taken out an option, on the same day, to buy more wheat. The cabinet secretary's order sanctioning import of another million tonnes of wheat only came in the morning of February 27, on which daySTC struck a deal for another half-a-million tonnes. (The reason why STC bought only half of what was ordered by the cabinet secretary was because the AWB indicated that it was not in a position to supply more wheat).
While the deal for the second round of purchases was struck only on February 27, the government seems to have prepared the groundwork for the imports a day in advance. Even the delivery schedules were finalised at the February 26 meeting.
The FCI, in a letter dated February 26 (soon after the meeting was held by the food secretary), complained bitterly about the "limitations it may face in handling of the entire quantity of 15 lakh tonnes (of wheat) in a short span of three months (March to June), especially when we (STC) did not have any prior intimation about the wheat import programme of the government." FCI sources now say the imported wheat is being stored in the open in "caps" -- an acronym for "covered with polythene sheets". An abandoned air strip in Andhra is one such place wherethe wheat is now lying. FCI made the following points in the letter of February 26, 1998:
The March to June schedule will be difficult to abide by. "If the entire 15 lakh tonnes is to be handled in the southern ports, optimum port handing capacity would be about 2-2.5 lakh tonnes per month. This would imply handling 15 lakh tonnes over a 6-7 month period". Pertinently, the FCI complaint did not fall on deaf ears and the initial supply schedule was later elongated. "It will be impossible to handle and accommodate the entire 1.5 million tonnes of wheat in the south zone of FCI (where the wheat was supposed to arrive) in such a short period. The requirement of wheat in the south zone is about one lakh tonnes per month for PDS and special schemes and disposal of the entire 15 lakh tonnes would thus unnecessarily get elongated adding to carrying costs and subsidy," the letter adds. The FCI also complained about the provision by which it has to "take over the wheat on high seas sale basis". Itwas not in the interest of FCI. The suggestion was that STC should own responsibility on quality and quantity up to the port exit points in India. The FCI also mentioned the problems it faced in earlier imports of Australian wheat because of presence of exotic weed seeds. At that time the imported wheat could not be distributed in wheat-growing areas because of fear that the exotic seeds (found in the wheat samples) would take root. This made the task of distributing the fresh 1.5 million tonnes of wheat even more difficult."FCI will be forced to hold such stocks for longer periods during which the quality may deteriorate. Besides storage problems in the south zone, Australian Standard white wheat is soft and cannot withstand long storage. What is more, insect activity is high in the humid coastal areas.
The wheat will get downgraded to lower categories, which cannot be issued to the PDS and other schemes of the government," the letter said.
The FCI went on to state it did not have the money forthe imports. The RBI refused to extend bank finance, and so it sought orders from the centre to the central bank to extend a ways and means advance of around Rs 800 crore.
When contacted by the Financial Express, STC chairman SM Dewan refused to comment on the issue. He merely said that the entire issue was under investigation by top government agencies and he would not like to make any statement that would hammer the investigations. In another letter written by the FCI to the food ministry on April 3, 1998, an STC officer made a series of allegations against the STC.
Among them are the following:"That State Trading Corporation has drafted /floated/ processed/ negotiated/ finalised the tender of imports and signed a contract with the AWB on February 26.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
