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Multi-brand retail at its best
Anil Kaul on how CAG criticism of functioning of armed forces canteens is misplaced
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Illustration: Sanjoy Naorem |
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NOTWITHSTANDING ITS excellent track record, the Armed Forces Canteen Stores Department (CSD) has come under a scathing attack by the CAG. The audit watchdog has found lapses in financial and business operations and the pricing and quality of goods of the CSD that sell household products at cheaper than market rates to armed forces personnel and their families.
The report of the Comptroller and Auditor General (CAG) of India, tabled in the Lok Sabha in August 2010, says the 3,600 unit-run canteens (URCs), or retail outlets of the CSD across the country have been kept out of the ‘purview of parliamentary financial oversight as they are considered to be regimental institutions.’ Yet these URCs get soft loans and quantitative discounts through the CSD from the Consolidated Fund of India, it says. ‘Neither the budget documents nor the performa accounts of CSD reflect the operations of the (URCs) that are also not subject to the accountability regime for operations funded by the Consolidated Fund of India.’
The CAG said it was denied access to the URC records by the army headquarters in Delhi ‘in spite of repeated requests’. It praised the CSD for its 55 percent increase in gross turnover ( Rs 6,955 crore in 2008-09 from Rs 4,481 crore in 2003-04). However, the gross and net profit had not shown commensurate increase during this period. ‘This was mainly due to increase in cost of goods purchased for sale as also increase in quantitative discount given to the units.’ Grants were given to organisations without even insisting on application for funds. Statement of accounts was never sought before sanctioning the grants.
Receipt of utilisation certificates was not watched, as required under GFR. Utilisation certificates were never insisted from major recipients namely the army, navy or air force for the grants provided.’ The performa accounts prepared by the CSD did not follow the generally accepted regimen of financial reporting, it said. During the six years from 2002-2003 to 2007-08, Rs 883.46 crore was transferred in the form of quantitative discount from the Consolidated Fund of India to the URCs. Evidence also indicated that benefit of quantitative discount (QD) has never been passed to the consumer.
Nothing could be farther from the truth. It is possibly due to ignorance of scrupulous methods used to handle funds of, by and from the CSD that the CAG has come to these ridiculous conclusions. For information of the citizens at large, the qualitative discount is distributed down to the unit level that houses the major portion of the consumers.
These are distributed on a priority-based list of welfare schemes and projects that are not covered by funding from the defence budget. These could be compared to self-financing schemes. Projects are monitored at all levels and completion reports obtained as a matter of routine standard operating procedures (SOP) and sent up the chain on a regular basis. As regards URC-earned profits, these are generated every quarter and distributed in three segments as per inviolable written instructions on the subject. The largest segment goes towards welfare of troops other than officers and JCOs, the next towards the JCO’s and the least to the officers.
Army Canteen Board in India was established in the British era. It was to provide canteen facilities to British troops through grocery shops and bars run by canteen contractors. However, the Army Canteen Board, liquidated in 1927, was replaced by the Canteen Contractors’ Syndicate (CSS). It was floated in the form of a limited company, under government control with its registration office at Karachi.
The Canteen Stores Department, the present organisation, thus took birth on 1 January 1948. With a working capital of Rs 48 lakh assigned to it from assets of its predecessor organisation, it has grown to over Rs 9,752 crore in 2010-11 — a growth over 20,316 times. The concept of Unit Run Canteens (URCs) was born after seeing that civilian contractors were making massive profits and not passing them on to the user. From a shoelace to a car, everything in between is provided. The concept is running very profitably for the military commanders at all levels and seen expanding exponentially ever since.
THE CSD serves 1.6 crore people. Other than services personnel and their families, it caters to civilians paid from defence accounts and paramilitary forces under operational / administrative control of the army. Its 10 commandments are:
1. Ensure provision of quality goods at rates cheaper than the civil market, even when all levies like excise duty, sales tax, octroi, etc., are paid
2. Eliminate middlemen’s margins and pass on the benefit to customers in the form of lower prices.
3. Deal only with manufacturers of repute or with national level sole-selling agents
4. Ensure complete adherence to quality norms through regular tests and checks.
5. Give a promise of quality that can be trusted.
6. Publish pictorial price lists and monthly bulletins to help purchase decisions.
7. Widen choice by stocking, in URCs, newly-introduced items. Subsequent provisioning is guided by user preferences.
8. Provide consumer promotion schemes as applicable.
9. Ensure after-sales service for all durables.
10. Pass on efficiencies into welfare schemes for defence personnel and their families.
Till the end of the 20th century, there was no quantification on purchase of any item other than those denoted as ‘Against Firm Demand’ (AFD). This led to serious malpractices as everyone in the neighbourhood of any serviceman or veteran used their suddenly found friendship to partake of cheaper and quality goods available. To add to this, unscrupulous officers at the helm of affairs allowed these facilities to be extended to all manner of non-uniformed individuals even remotely connected or even unconnected with the armed forces.
To curb this menace a system of smart cards was instituted with severe restrictions of quantities and monetary value of pURChase. This, to some extent, has brought down the popularity of the soldier but the occasional case of rum or whiskey ferreted out by clubbing a few cards on special occasions like a marriage in the family is not worthy of a CAG indictment.
Kaul, a retired officer, is the author of Better Dead Than Disabled. The views expressed here are personal.
vrcanilkaul@hotmail.com
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