Agencies/New Delhi

The Indian government auditor has alleged that there was serious malpractice involved in a Rs520bn ($9.5bn) government scheme to write-off loans to small farmers.

The report by the Comptroller and Auditor General, an autonomous body, was placed in parliament yesterday, but has not yet been made public.

The report said farmers who had taken loans for non-farming activities, or whose loans were not eligible to be waived, benefited under the scheme while others who qualified for assistance were overlooked, NDTV news channel reported.

The report audited 90,000 farmers’ accounts between April 2011 and March 2012. It said there were problems with one out of every five cases covered by the scheme, NDTV reported.

The flagship programme to tide the country over during an agricultural crisis was announced by Prime Minister Manmohan Singh in 2008.

The government has so far waived loans worth Rs520bn related to an estimated 34.50mn small and marginal farmers.

“Farmers who had taken loan for non-agricultural purposes or whose loans did not meet eligibility conditions, were given benefits under the scheme,” the CAG said.

A total of 14,027 farmers committed suicide in 2011 according to government data. The figures for 2012 are not yet available.

The opposition Bharatiya Janata Party has alleged the mismanagement resulted in a scandal worth Rs100bn and has demanded a probe by the federal investigative agency.

The BJP alleged that nearly 3.4mn farmers had been denied their right under the loan waiver scheme.

Party spokesman Prakash Javadekar said the CAG revelation further proved that farmers had got a raw deal from the United Progressive Alliance (UPA) government, and demanded a waiver of all outstanding dues as on March 31, 2013.

“Nearly 34 lakh eligible farmers stand denied their right for debt waiver and more than 24 lakh ineligible people had also got benefits under the scheme,” he said.

He noted that the CAG has checked only about 90,000 accounts out of 34.5mn accounts of farmers and found even with this small sampling that 13% eligible farmers were not considered by the lending institutions.

“Further 8.5% ineligible beneficiaries got undue windfall profit. There may be many who may not even be farmers... A CBI (Central Bureau of Investigation) probe should be ordered to get the real picture,” he said.

Javadekar said the figure of eligible farmers not getting the waiver benefit and the number of ineligible beneficiaries is likely to increase once detailed inspection of each account is carried out.

“What is shocking is that some of the micro-finance institutions, through not eligible, got benefited. The CAG has come across the cases of tampering, overwriting, alterations which is tantamount to a fraud and therefore a scam. The public money has gone to undeserving beneficiaries,” he said.

He said there were other lacunae highlighted by the CAG like 6% farmers not being extended the benefits to which they were entitled.

“Debt waivers certificates are not issued to many farmers causing difficulties in getting fresh loans. The BJP demands that the inquiry must fix the responsibility and action must be taken against the guilty,” he said.

Javadekar said agricultural distress had increased despite the loan waiver and farmers continue to commit suicide.

He demanded that the government accept the M S Swaminathan committee formula of “cost of production plus 50%, , as the viability of farm economy has disappeared because continuous rise in input costs like fertilisers, pesticides, seeds, water, electricity and diesel.

“The gap between the MSP (minimum support price) and the cost of production as calculated by the CACP (Commission for Agricultural Costs and Prices) is getting narrowed. The terms of trade, in the UPA regime, has gone against farmers,” he said.

The UPA government has been plagued by a series of major financial scandals over the past few years.