Government Admits Massive Fraud in Loan Waiver Scheme - The New Indian Express

Government Admits Massive Fraud in Loan Waiver Scheme

Published: 02nd February 2014 07:07 AM

Last Updated: 02nd February 2014 07:08 AM

The farmers’ loan waiver scheme, once touted as a trump card for the UPA, has become a source of embarrassment for it. The government has admitted massive fraud, irregularities and tampering of data by officials in the Rs 65,000 crore welfare project.

The Department of Financial Services under the Ministry of Finance had appointed RBI and National Bank for Agriculture and Rural Development as nodal agencies to monitor the implementation of the scheme for the banks under their control.

Of the total beneficiaries, 1.85 crore owed money to government-owned banks and 1.88 crore to lending institutions under NABARD. No money actually changed hands or was paid to beneficiaries.

The implementing agencies simply wrote off the dues and claimed reimbursement from the government.

Responding to the Public Accounts Committee’s (PAC) concerns about large-scale fraud, the government said in at least 301 cases, it has detected tampering of records of beneficiary farmers and five FIRs were lodged. In 449 cases, responsibilities have been fixed by the lending institutions.

The government probe indicated that funds were also misused in writing off personal, vehicle loan, purchase of land and loan for shops in connivance with branch officials, who were supposed to help farmers suffering from heavy debt burden.

According to sources, the PAC also flagged the case of over 21,000 accounts which have no acknowledgement from farmers or any other proof indicating shoddy implementation of the scheme.

“Large number of eligible farmers might have been eventually deprived of benefits of the scheme due to perfunctory approach and the scheme could not achieve the intended goals,” the PAC observed, terming the scheme a failure.

Sources said an official of Department of Financial Services who recently deposed before the committee did not dispute all these irregularities.

“The issues largely raised by the CAG were correct. I do not think that government has any intention of disputing the veracity of the points raised by CAG,” the official told the PAC.

In a written note to PAC, Department of Financial Services gave details of action taken by the authorities to recover funds. It said the recovery of `2.38 crore has been made in 908 cases where benefits were granted to ineligible beneficiaries. In addition, recoveries have been made amounting to `3.61 crore in 1,358 cases where excess benefits were extended to the beneficiaries.

Although, the amount recovered so far is too small comparing the massive irregularities, government has assured re-verification of entire 34, 277 branches under RBI and over 9,000 under NABARD.

The panel is understood to have slammed the government’s myopic approach in conceiving and implementing a scheme involving financial concessions to the tune of more than `65,000 crore, adding that the vital lists of intended beneficiaries were prepared in a cavalier manner as these were replete with mistakes, leading to serious financial lapses.

“The PAC has asked the government to submit an action taken report, fixing the responsibilities of those responsible for irregularities by June 2014.

Government further assured the PAC that it was committed to re-examine every single case and take corrective action. But, considering the very large number of beneficiaries, this is going to take some time,” a source said.

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