Case of the ‘missing’ paddy: How Telangana’s hunt for missing stocks uncovered a multi-crore scam

It was based on a hunch that the Telangana Vigilance and Enforcement department began searching in Suryapet, Nalgonda, Medak and Warangal in connection with an unusual case – that of missing paddy. What it was unprepared for was the scale: over the next month, it uncovered an alleged multi-crore scam involving at least 2.7 lakh metric tonnes of missing paddy from the last three years.

It allegedly began with the state government’s paddy procurement in 2023. Typically, the state government procured paddy from farmers and routed it to millers, who would first safekeep and later mill the grain to produce rice.

Per 100 kg of paddy, 67 kg of milled rice would be the output. This would then be directed back to the state government’s public distribution system (PDS) or ration shops. Here is what went wrong: at least 58 millers did not route rice back to the ration shops.

Instead, they allegedly sold it in the open market for a profit. Officials estimate that the state lost 2.7 lakh metric tonnes of paddy worth Rs 680 crore between 2023 and 2026. “The government had a doubt and ordered a probe, and we unearthed a multi-crore scam,” Director of Vigilance and Enforcement AR Srinivas told The Indian Express.

“The millers didn’t possess the paddy stocks given to them and had also failed to return the corresponding quantity of custom-milled rice to the govt,” Srinivas explained. The rice varieties that should have returned to the ration shops include fine rice and parboiled rice, he said.

According to officials, the gaps surfaced when authorities tallied millers’ records to their own. The V&E department’s preliminary findings allegedly unearthed a Rs 120 crore paddy deficit that they suspect ended up in the open market.

“We expanded the search and realised that this was happening across the state,” said Srinivas. The inspections were conducted under the supervision of V&E DIG Abhishek Mohanty and DS Chauhan, Director General of V&E. Those allegedly involved are “big millers who have the wherewithal to hoard and sell”, Srinivas said.

“In Suryapet alone, eight millers were found to have diverted Rs 239 crore worth of paddy. In Jagtial, four millers were found to have diverted Rs 127 crore worth of paddy,” he said. The department has started filing criminal cases against the millers.

“We issued notices to millers to either pay for the paddy which is not available with them or face jail,” Srinivas said. Under Sections 316 and 318 of the Bharatiya Nyaya Sanhita, as well as relevant sections of the Essential Commodities Act, 1955, misappropriation of public assets allegedly carries a 10-year jail term.

The recovery drive has already yielded significant results, officials say. “At least Rs 300 crore of paddy has been recovered after notices were issued to mill owners,” one official said. “While several millers have begun repaying the value of the missing stocks, others have approached courts challenging the action.”