CAG: Rs 52,000-cr farm debt waiver scheme contentious

Implementation of Rs 52,000-crore farm debt waiver scheme, government auditor CAG on Tuesday said in several cases ineligible farmers were given benefit while deserving ones were left out. Comptroller and Auditor General (CAG) has also found instances of tampering of records and pulled up the Department of Financial Services (DFS) in the Finance Ministry for deficient monitoring of the multi-crore scheme. “Overall, the Performance Audit revealed that in …(22.32 per cent of cases test checked) there were lapses/errors which raised serious concern about the implementation of the scheme”, said the CAG report tabled in Parliament on Tuesday. The report deals with Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS) 2008 under which 3.69 crore small and marginal farmers and 60 lakh other farmers were given debt relief to the extent of Rs 52,516 crore. The CAG report said in several cases “farmers who had taken loan for non-agricultural purposes or whose loans did not meet eligibility conditions, were given benefits under the scheme.” It said several farmers who were eligible for the benefit under the scheme were not considered for loan waiver by the lending institutions. Besides other observations, the report said the Micro Finance Institutions (MFIs) were given benefit under the scheme in violation of the debt waiver guidelines. The banks, it said, also claimed undue benefits like penal interest, legal charges, miscellaneous charges from the government. Under the scheme, banks were supposed to bear these charges themselves. Referring to the issue tampering of records, CAG suggested DFS should review such cases and take “stringent action” against erring officials and banks. After extending benefit under the scheme, the banks were required to issue a certificate and obtain an acknowledgement from the farmer for the same. However, the CAG report found that in several cases “the lending institutions had not obtained acknowledgement from the farmer”. Subsequent to the issue of draft audit report to the Finance Ministry and exit conference, the DFS had advised the RBI and NABARD, the nodal agencies for implementation of the scheme, in January requesting them to issue instructions to lending institutions for taking immediate corrective measures in respect of audit observations. The DFS instructed that institutions need to take action like recovery of money paid to ineligible beneficiaries and loans extended to MFIs, action against erring banks, fixing responsibility of bank officials as well as bank auditors. The CAG has recommended that the Ministry, on its own part, may verify high-value claims of re-reimbursement, high-risk areas like inadmissible charges and at least sample claims of lending institutions to ensure that the financial interest of the government is protected. “Follow-up action in response to complaints or inspections should be properly monitored,” the report added. Referring to the monitoring aspects, CAG report said the nodal agencies themselves were relying on certificates and data of lending institutions without conducting independent cross checks. “This raises the issue of conflict of interest, since in effect, the lending institutions were performing a dual role, first implementing and then monitoring their own work,” the report said. The report said the audit observed that DFS and nodal agencies were aware of numerous flaws in the implementation of the scheme “yet they did not take adequate measures to rectify the same in timely manner”. Over the last four financial years, the government has waived more than Rs 52,000 crore debts related to about 3.45 crore farmers.

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