Brijesh Pandey; Delhi; November 04, 2010
Army silent over use of profits earned through its canteens;
Are army canteens, used by the millions of defence personnel and their families, a private venture or are do they fall under the category of government enterprise? Do the crores of profit generated by these retail canteens fill the army’s coffers or should it be subjected to audit as with any other government ventures?
If official documents available with Tehelka are anything to go by, unit-run canteens or URCs in defence parlance are purely private ventures and cannot be treated as an instrument of the state. Thus, they do not even come under the ambit of the Right to Information (RTI) Act.
Therefore, an RTI application filed by Tehelka was unable to prise the information as to how exactly crores of the profit generated by the canteens are utilised, as the information was deemed outside public domain.
Providing canteen facilities to defence personnel and their families is obligatory on the part of the government. For this, the Canteen Stores Department (CSD) was formed in 1948, which act as a wholesale depot. At present, 34 CSDs purchase goods directly from manufacturers.
From these CSDs, goods are then supplied to approximately 3,600 retail outlets or URCs. The CSDs keep a profit of 2 to 10 per cent on the goods supplied to URCs, and according to an official record, as on March 31, 2009, the annual turnover of the CSDs was Rs 7,225 crore, and the profit Rs 300 crore.
The Comptroller and Auditor General (CAG) of India audits this account of the army. The army deposits 50 per cent of the profits of the CSDs to the Consolidated Fund of India. Out of the remaining profit, 25 per cent goes back to the CSDs and 25 per cent goes to the armed forces for welfare activities. This much is clear. It is what happens to the money left over that is strange. Apparently, while this 25 per cent profit is auditable in the hands of the CSDs, it becomes non-public fund when it reaches the armed forces. So practically no one knows how a quarter of the Rs 300 crore annual profit of the CSD is spent.
However, this is a mere drop compared with the bigger booty generated by the URCs. The armed forces are silent about this aspect of the canteen business. URCs, with a turnover of Rs 7,600 crore and a profit of Rs 350 crore, are in their entirety categorised as a private enterprise of the army. Questions like why and how are swept under the carpet, with one senior officer reasoning, that the army is not answerable “to anyone regarding private business.”
Such conduct of the armed forces raises several uncomfortable questions:
- When the CSD is a government entity, how can URCs, its operational arm catering only to defence personnel, be a private venture?
- How can URCs be private entities when almost everywhere it is located inside army establishment and manned by defence personnel?
- Why does the army not want to reveal what it does with the profit from URCs year after year?
- How and where do the unit commanders spend this huge profit, worth crores every year?
- Why are URC accounts not audited by the either CAG or Controller General of Defence Accounts (CGDA)?
When an RTI application was filed to the CGDA on July 14, 2009, about the maintenance and audit of URC accounts, the answer was shocking. The CGDA replied, “The profit earned by URCs from selling goods to customers are not added/ transferred to CSD, as they are run by regiments/units, and are not susceptible of audit by this office.”
This is not all. Tehelka has access to the minutes of the Army Commanders’ Conference held in April 2009, in which it was observed that, “Army Headquarters have received RTI queries about the status of URCs. It is clarified that URCs are purely private ventures and are not funded by the Consolidated Fund of India. Thus URCs do not fall under the purview of RTI Act and representation.”
When Tehelka tried to contact the canteen head and the CAG for their version, they refused to comment on the issue.
In times such as these, when the involvement of top generals in various scams has already dented the image of the Indian army, silence on matters like the URC profits can only worsen the already battered image of the armed forces. Are the mandarins listening?
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