CHENNAI: The Tamil Nadu Civil Supplies Corporation (TNCSC) has suspended a regional manager and a quality controller in Kancheepuram for allegedly colluding with private rice mills (hulling agents), which supplied 6,000 MT of old PDS rice instead of freshly milled rice to the corporation for distribution through the Public Distribution System (PDS). The freshly milled rice from the paddy supplied by the TNCSC for hulling may have been diverted to private market, sources said.
The scam took place between May and July during the 2025-26 kharif marketing season (KMS) and is suspected to have occurred in several districts.
Four private rice mills functioning as TNCSC hulling agents supplied the said volume of rice valued at Rs 10.82 crore, while allegedly retaining the freshly milled rice on their premises. The TNCSC regional manager and quality controller, who were responsible for verifying the quality of rice received from the hulling agents, allegedly colluded with the mills and allowed the old PDS rice to be received and stored in TNCSC warehouses.
The malpractice came to light during a recent vigilance inquiry, following which the TNCSC suspended the two officials. It also terminated the contracts of the four hulling agencies and blacklisted them.
‘Major leakage of rice occurs during transportation from warehouse’
TNCSC managing director Shilpa Prabhakar Satish confirmed the suspension and said departmental action was being initiated against the errant officials. “Action will be taken against the hulling agents as well. Scrutiny against more staff is under way,” she told TNIE.
After segregating the old PDS rice based on quality reports, TNCSC has directed the four rice mills in Kancheepuram to supply fresh rice of the same quantity, around 6,000 MT. The department has also intensified inspections in other districts and sought explanations from several officials and hulling agents. “Inquiry is under way and more people are likely to be suspended in the coming days,” an official said.
As per Food Corporation of India (FCI) standards, the paddy-to-rice conversion ratio is 67%. Accordingly, hulling agents are required to supply 67 kg of rice for every 100 kg of paddy handed over to them.
Explaining the alleged modus operandi, sources said a major leakage of PDS rice occurs during its transportation from TNCSC warehouses to ration shops.SR Venkatesan, former joint registrar of cooperation department, said a rice bag supplied to ration shop is recorded as weighing 50.65 kg in TNCSC records, but it often weighs only 44 to 45 kg when it reaches the shops. “Despite repeated representations, the issue has remained unaddressed for several years,” the former official said.
“If four to five kg of rice is lost from every bag, the TNCSC warehouses alone illegally retain PDS rice worth more than `300 crore to 400 crore every year. The PDS rice is then diverted to rice mills in collusion with TNCSC officials. When the mills subsequently send the same rice to the TNCSC as a replacement for freshly milled rice, the discrepancy is detected. The freshly milled rice is likely to be diverted to private market,” Venkatesan explained.
Another official from TNCSC said, “If the moisture level is lower than the prescribed standard, the quality controller at the warehouse should conduct further tests to determine whether the rice is freshly milled or old PDS rice. However, in many places, the regional managers and quality controllers fail to conduct the required tests.” The official further added that a small portion of PDS rice is also illegally diverted from ration shops to rice mills that push it to other states.