The Comptroller and Auditor General (CAG) has picked holes in the functioning of Food Corporation of India (FCI) in 2015-16, citing fraudulent payments and spoilage of 4.72 lakh tonnes of wheat worth Rs.700.30 crore.

In its report that was tabled in Parliament on Friday, the CAG said "fraudulent excess payments of Rs.14.73 lakh and Rs.37.89 lakh" were made to the transport contractors in the northeast "on account of payment on higher rate and for bills for longer distance than actual for transportation of food grains".

The CAG also said that the FCI sold wheat to bulk consumers at a rate below cost under open market sale scheme during 2013-14, which led to non-recovery to the tune of Rs.38.99 crore.

Also, the corporation made excess payment of Rs.24.96 crore to the Uttar Pradesh government and its agencies on account of cost of gunny bags and gunny depreciation for procurement of paddy and delivery of rice during 2014-15 kharif season, the watchdog pointed out.

"FCI recovered Rs.2.96 crore after audit pointed out the excess payment and recovery of the balance Rs 22.00 crore was yet to be made," it said.

The audit watchdog also found out that substantial quantity of food grains was lying in open areas with the state government so about 4.72 lakh tonnes of wheat worth Rs 700.30 crore deteriorated and was declared as non-issuable to Targeted Public Distribution Scheme. 

The FCI had to borrow from costlier means of finance such as cash credit, short term loans after the subsidy it received from the government just 67 per cent of the subsidy claimed during 2011-16. 

It resulted in heavy interest burden of Rs.35,701.81 crore during 2011-16, the CAG said.

It also highlighted discrepancies such as contracts to ineligible, bidders were awarded contracts for construction of godowns, undue benefit, higher handling cost and incorrect measurement of distance by Punjab Grains Procurement Corporation Limited (PUNGRAIN) and FCI, deployment of costlier labour, all these resulted in excess expenditure.