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Transport subsidy loot

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  14 Aug 2016 12:00 AM GMT

There has been much distress in Northeast states over the Centre’s move in 2014 to keep in suspension the North East Industrial and Investment Policy (NEIIP). The upshot is that new industrial units cannot be registered under this policy, so there can be no enjoyment of various subsidies, particularly transport subsidy. This is hurting several industrial units in Assam, prompting Dispur to take up the matter with the Centre to continue the policy. While stating this at the Assembly, Industries and Commerce minister Chandramohan Patowary said only outstanding transport subsidy totaling Rs 30 crore for around 80 industries in the State was cleared in 2015-16. While the Modi government is going all out to encourage start-ups and nurture entrepreneurs from backward groups, it may seem odd why it is putting away the NEIIP in cold storage. The problem is with the manner subsidies have been skimmed off brazenly for donkeys’ years. All kinds of frauds have been perpetrated by unscrupulous industrial units; neither the Central nor concerned state governments can be absolved of the massive scams. It is another classic instance of the systemic loot that goes on in the me of well-meaning schemes.

NE states, along with J&K, Himachal and a few other states, had long been benefiting from the transport subsidy scheme (TSS) — the idea being to compensate industries incurring additiol costs in transporting raw materials and inputs for manufacturing in such states. While some genuine units rightfully benefited from the subsidy, several others exploited its loopholes and lacue to fraudulently bill the government. Many units still show Siliguri as the trans-loading point of goods, when the truth is that trains are bringing in material to Assam along broad-gauge tracks to Bongaigaon, Guwahati and all the way up to Tinsukia. So raw material is shown on paper to be transported on road carriers from Siliguri to ‘manufacturing centers’ within Assam, with many a-times ramshackle sheds on the plots but little else. The CAG has time and again pointed out widespread instances of insufficient, if not fudged, documentation for claiming transport subsidy. Even after its audits kept exposing massive irregularities, concerned state governments did little to follow up on the ground. There should have been regular inspections of units filing transport subsidy claims; any unit found making false claims should have been pelized.

Successive Central governments too sat on the problem. The Department of Industrial Policy and Promotion (DIPP) under the Union Ministry of Commerce should have ensured that state governments fully comply with the guidelines. If an industrial unit is producing only on paper but claiming transport subsidy, it can be easily verified how much raw material is actually being unloaded at its premises, its actual manufacturing capacity, how much power it is consuming, the amount of finished product it is selling. But there was hardly any cross-verification of subsidy claims with records kept by other departments like Transport, Power, Sales Tax and Excise. All this and more besides should have been done to plug leakage, but it is clear that all parties concerned were ‘comfortable’ with the system. CAG reports in the past have shown up numerous instances of district level and state level officials passing subsidy claims to the Centre without supporting bank or power consumption papers or sales tax and VAT assessments. Central officials in New Delhi meanwhile have been blithely clearing such bills, raising suspicions of all-round complicity of corrupt officials with robber industrialists to milk the system.

Assam too has figured among the major offending states in CAG reports. During the debate in the House on this issue recently, AGP member Prafulla Kumar Mahanta pointed out how some industrial units have been getting transport subsidy by showing scooter registration numbers as truck numbers. Sometimes the subsidies released for different units are found to bear the same challan number. Such is the rampant fraud defeating the very purpose of the scheme. So if the NDA government at the Centre is taking a hard look at TSS, there is very little the state governments can do now after years of doing nothing. The tragedy is that some local entrepreneurs in NE states, with dreams of starting small or medium enterprises, are paying the price. Benefits like transport, power, interest and other subsidies under a revamped NEIIP could have given them a leg-up, as well as send a positive sigl to the region’s economy.

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