Rice, pilfered from PDS in Tamil Nadu, is being channelled through an informal network to reach the neighbouring States of Kerala and Andhra Pradesh, and even further afield. Given to card-holders for free in the State, it sells for as much as ₹55 a kg after being polished in Kerala. At times, it even comes back to the State, flaunting tags of superior brands. An investigation by The Hindu finds that police raids have just managed to scratch the surface of what seems to be a mafia-style racket.

At 8.45 am on July 3, the four fair price shops located in the same building on Kanagam Road in Taramani open. Rajalakshmi of Pillaiyarkoil Street has been waiting in queue with her ration card. She receives her quota of 20 kg of rice, free of cost. Then she looks to her left and right, crosses the road to a grocery shop and sells her bag of rice for ₹5 per kg.

“The rice is not at all palatable since it comes with the husk. My family members don’t like to eat it. So, we sell it to the shop or brokers for ₹5 per kilo and will get ₹100 each. If we are not going to use it, why should we carry it all the way home,” she asks, looking to justify her actions.

At noon, a group of around six people – four of them women - with no PDS smart cards go into the complex. They visit every shop within 20 minutes and emerge carrying two bags of 20 kg of rice each from the fair price shops. “We come here, buy rice from the shops at ₹5 per kg and sell it at a nearby house. The owner of the house gives us ₹10 per kg,” says one of the women.

A leaking system

This year, the Tamil Nadu government will supply 38.04 lakh metric tonnes of rice through its PDS shops. But where is the rice actually going?

A multi-centre investigation by The Hindu in Tamil Nadu showed the trail of the rice, pilfered from PDS, being channeled through a formal network to reach the neighbouring states of Kerala and Andhra Pradesh. Now, for some granular detail:

Between January 2017 and March 2018, the Criminal Investigation Department of the Civil Supplies Department seized 19,82,400 kg of PDS rice and registered 8,232 cases across the State.

In 2017 alone, the Chennai unit of the Railway Protection Force seized 2,21,574 kg of PDS rice as it was being smuggled from the northern districts of the state to Andhra Pradesh. In 2016, it was 1,36,046 kg; in 2015, 41,041 kg. Up to July 2018, they have seized 1,43,363 kg.

Coimbatore police seized 50,000 kg of rice - intended for Kerala’s Palakkad - in 2017 across 285 cases, arresting 267 individuals. This year, up to July, they have seized 21,000 kg across 150 cases and have made arrests at the rate of one per case.

The quantity of rice seized in the state over 2017, an incomplete aggregate of a mere three sources surveyed by this newspaper, comes to 22,53,974 kg. For perspective, consider this: the Food Corporation of India supplied the entire Union Territory of Daman and Diu 24,07,000 kg of rice in 2016-17.

A cheap alternative

Boards displaying images of steaming puttu with mouth-watering fish curry or beef roast will be a tempting call for gastronomes who traverse the Salem-Kochi highway, starting from Walayar in Palakkad district. While the price of pachari (raw white rice) needed for making short grain flour used in puttu starts from ₹25, many of these small-scale eateries have a cheap alternative to run the business: PDS rice smuggled in from Tamil Nadu.

Available at around ₹20 per kg, PDS rice smuggled from Tamil Nadu is the cheapest alternative that many eateries compete to source, to make batter for dosa, idlis, puttu and a variety of other preparations. Kerala--unlike Tamil Nadu, which has been providing free rice to all, spending ₹3,000 crore annually on subsidies – provides 30 kg of free rice monthly only to Antyodaya Anna Yojana card holders.

While raw white rice smuggled across the border goes into the preparation of these products, boiled PDS rice is rumoured to be turned to brown rice (matta rice) using crude methods of adulteration like mixing it with red oxide and oil.

However, Civil Supplies CID Unit of the police and Civil Supplies Department in Tamil Nadu are yet to provide evidence of such adulteration.

While two arterial roads, Pollachi-Palakkad road and Salem-Kochi highway, connect Coimbatore to Palakkad in Kerala, smugglers choose routes that have poor patronage. An official attached to the Flying Squad of the Civil Supplies Department said that there are nearly 25 alternative routes to smuggle rice across the border in vehicles ranging from mopeds to lorries. There have been instances when PDS rice in gunny bags has been seized from Kerala-bound passenger trains.

At Kanniyakumari district, apart from the three major roads – Parasala, Nithravilai and a road that runs along the Western Ghats – leading to destinations in Kerala, there are 11 smaller routes, which are actively used by rice smugglers. The most notorious route is the Kollencode-Nithravilai stretch as patrolling there is not sufficient to control this activity.

“After buying free rice for anywhere between ₹5 and ₹8 per kg in Tirunelveli or Kanniyakumari through brokers, it is taken to locations close to the Kanniyakumari-Kerala border either in vans or mini lorries that cross checkpoints easily. After getting stored at a point – Panachamoodu – the smuggled rice is resold at ₹25 per kg to the traders, who polish this rice and pack it again in 25 kg bags. Once polished, the rice is sold for ₹55 a kg in Kerala. This is a lucrative business that cannot be stopped,” says a recently retired senior police officer.

A senior official, who had worked with the civil supplies flying squad in Kanniyakumari district, says that 10 tonnes of rice meant for public distribution is smuggled on an average every day from Kanniyakumari district to Kerala. “Smuggling will reach a crescendo between the first and tenth of every month as the offtake by cardholders is high during this period. Smuggling peaks before Onam every year as Kerala’s demand spikes during the festival,” he adds.

Officials say smugglers also use the sea route to transport rice and use the coastal villages in Western Kanniyakumari district to launch boats that take them to Poovar, Vizhinjam and other coastal hamlets in Kerala.

Trains are the preferred mode of transport for smuggling rice to Andhra Pradesh and Odisha. The smugglers carry rice packed in bags of different quantities from Ariyalur, Villupuram and Tindivanam on Andhra Pradesh-bound trains.

Officials cite seizure volumes to state that the quantum of smuggling out of the northern districts of Chennai, Thiruvallur, Viluppuram and Vellore is the highest. Gummidipoondi-Gudur and Arakkonam-Renigunta are the most common routes; police officials say the rice is offloaded at Nagari, Gudur, Nellore and Sullurpeta railway stations. From there, it is taken to rice mills for polishing.

Recent seizures by revenue authorities and CID of the Civil Supplies Department show how PDS rice is hoarded ahead of smuggling in rural Thiruvallur. On December 8, 2017, authorities recovered three tonnes of rice in 40 gunny bags from a hut in Periya Obulapuram near Gummidipoondi.

After four days, the authorities seized four tonnes of rice from a thorny bush in Periyakavanam near Ponneri. The next week, four and half tonnes of rice was seized again from a house in Gummidipoondi. In the second week of June 2018, over 8 tonnes of PDS rice – hoarded in a stockyard of the hostel attached to Tiruthani Government Arts College – was seized.

Inflated sales

After the introduction of point-of-sale (POS) devices at all fair price shops, card-holders receive text messages on their registered mobile numbers about their transactions. Most do not complain even if their bill reflects the purchase of rice when in fact they did not procure any. Complaints do not really help. “My PDS shopkeeper, against whom I have complained once already, recently asked if he could show an inflated purchase of rice against my name. I had to complain again,” says a resident of Velachery.

Tamil Nadu needs a lot of rice: the state procured the most from the Food Corporation of India during 2016-17, going so far as to lift 102% of its allotted quantity. This was second only to Odisha’s 110%. However, Odisha only lifted 19,56,364 tonnes; Tamil Nadu needed 36,29,833 tonnes.

In November 2017, this newspaper reported that despite eliminating one crore names across 10 lakh duplicate cards, the September 2016 requirement of 3,19,548 tonnes had dropped only to 3,19,343 tonnes in September 2017. Though two recent Central government studies pegged pilferage at 11-12 %, a state government official estimated that it was as high as 30%.

According to officials with the Civil Supplies Department and Civil Supplies CID in Coimbatore, the rice distributed free of cost through ration stores is sourced by agents from houses at rates between ₹5 and ₹10. Stocks collected from houses are hoarded at small godowns before being transported across borders through various means.

“We have not been able to identify networks of agents involved in sourcing PDS rice from houses. Those arrested for smuggling have confessed that small groups of two to five persons are involved,” says a police officer attached to the Civil Supplies CID in Coimbatore. Police say that within localities such as Ponneri and Minjur in Thiruvallur district, individuals go from door to door, collecting rice.

R. Lenin, general secretary, Tamil Nadu Cooperative Societies’ Employees' Association, says soon after buying rice at fair price shops, many people sell it to agents.

“Some beneficiaries do not prefer to use the rice bought from fair price shops. For others, the quantity they get is more than what they need. Usually, it is these people who sell to agents. They are paid around ₹10 per kg,” he adds.

Mafia at work

K. Balasubramanian, honorary president of the Tamilnadu Fair Price Employees’ Union, says there is no foolproof delivery system. “Like sand mafia and red sanders mafia, we are facing a rice mafia looting the rice meant for poor. We don’t get correct quantity of rice from godowns. We have 35,169 fair price shops where almost all rice bags received are short by a few kilos. For instance, a rice bag should weigh 50.650 kg, but staff at the outlets receive two-five kilos less. The rice is then diverted from godowns to the grey market by certain influential individuals,” he adds.

Police and staff union representatives say that the rice smuggled to Andhra Pradesh and Karnataka is even brought back as Andhra Ponni and Karnataka Ponni rice after polishing.

Additional Director General of Police (Civil Supplies) Pratheep Philip claims due to persistent efforts, smuggling of rice has been reduced drastically.

“From 2017 to March 2018, 120 notorious smugglers have been detained under the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act 1980 and lodged in prison. We have broken the back of the smugglers,” he says.

From January 2017 to March 2018, 8,232 cases were registered by Civil Supplies CID. 19,824 quintals of PDS rice worth ₹1.12 crore was seized. The Civil Supplies CID has introduced a concept called ‘Know Your Criminal’ to track repeat offenders and follow their movements to prevent illegal acts besides conducting frequent meetings of stakeholders for intelligence gathering.

(With inputs from R. Sivaraman and Deepu Sebastian Edmond in Chennai, Wilson Thomas in Coimbatore, P. Sudhakar in Tirunelveli and Pon Vasanth B.A. in Madurai)