New Delhi: A second audit of the Modi government’s flagship generic medicine scheme has found that the Bureau of Pharma PSUs of India (BPPI) — the department responsible for its execution — had allegedly backdated entries in its account books, delayed payment of taxes to the government and evaded paying gratuity to employees among other irregularities.
The second audit of the Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) had been ordered after ThePrint had reported the lapses highlighted in the first audit by the government’s internal audit committee.
It was conducted by external auditors, between August 2018 and January 2019, who examined records since 2014-2015 up to 2017-2018, when the government had launched the scheme.
The auditors have allegedly found that BPPI, which is under the Ministry of Chemicals and Fertilisers, had failed to employ even basic accounting procedures in that it had been running the scheme with a few commerce graduates without hiring a professional chartered accountant.
“The BPPI did not have an approved document, setting out its accounting policies…There were significant delays in posting of the vouchers in the books of accounts and updating of account records including related to the recording of purchases, sale, and inventory,” reads the audit report, which was accessed by ThePrint.
“There were numerous errors in the financial statements that got corrected during the course of the audit.”
The scheme, launched as the Jan Aushadhi Yojana by Manmohan Singh’s UPA-II government, was rebranded and relaunched by PM Narendra Modi to provide generic medicines at affordable prices through 5,000 Jan Aushadhi stores across the country.
It is one of the schemes that the prime minister regularly plays up. This year, he interacted with beneficiaries and store owners though video conferencing and announced that 7 March would be observed as ‘Janaushadhi Diwas’ to create awareness and provide impetus to the use of generic medicines.
But it has been plagued by controversy. The first audit by the Office of Chief Controller of Accounts, which submitted the report in 2018, had highlighted that the BPPI had bought six times the medicines it was supposed to, at a cost of Rs 47 crore and without any storage facility.
The report, for the period between 2014-15 and 2016-17, called out the BPPI for not considering that this would lead to a pile of expired drugs in the warehouse.
BPPI not paying gratuity: Second audit
According to the second audit report, BPPI had evaded paying gratuity to its employees. “Provision of payment of Gratuity Act is applicable to the BPPI as the number of employees is more than 10,” it reads. “No provision of gratuity is created in the books for compliance of the above law.”
It also found serious lapses in payment of taxes and tax deducted at source (TDS) back to the government.
“During the year, there were delays in the deposit of GST and some delays in the deposit of tax deducted at source. This would lead to the payment of interest on delayed deposits and could have penal consequences,” the audit report mentions.
Moreover, there were no checks on the movement of the inventory — life-saving medicines in this case — in the organisation, the report says. “There was no gate inward or outward registers maintained at the central warehouses, which may raise the question on the actual movement of receiving and transfer of stock from the central warehouse.”
The second audit further found that the critical requirements of inventory management such as deciding maximum stock, minimum stock or when to reorder the stock were not created by the company which had resulted in almost 11 months purchase of inventory laying at closing stock.
Also read: Modi govt slashed prices of cancer drugs, just not for the costly ones
‘Absence of basic accounting practices in BPPI’
The auditors have accused BPPI of not maintaining a fixed assets register, which contains asset-wise details of accumulated depreciation and the location of fixed assets — a normal practice for every organisation.
“No physical verification of assets was conducted till date, which raises the question on the existence of fixed assets,” the report says. “As per the General Financial Rules (GFR), fixed assets should be verified once in a year.”
The audit also found misappropriation of the interest that BPPI was reaping on the fixed deposits it created out of the grants given by the government for the scheme.
“Fixed deposits and interest on fixed deposits is not reconciled with the bank,” the report says. “Differences of interest of Rs 7 lakh and closing balance of over Rs 57.75 lakh on such investments in FD were identified and provided for appropriate action.”
Now everything is foolproof, says BPPI CEO
BPPI CEO Sachin Singh, however, told ThePrint that the organisation has corrected the lapses.
“We have noticed the lapses and we have taken strong actions to put the system in place against every point mentioned by the auditors. Apart from introducing the best accounting practices, we have introduced high technology software which has eliminated the manual interference in the majority of our functions,” said Singh, an Indian Revenue Service (IRS) officer who the government appointed last May to get the scheme back on track.
“Everything is controlled by technology and the system is now foolproof.”
Singh further said that BPPI has hired two chartered accountants along with one cost accountant and two semi-qualified chartered accountants.
He also said that BPPI has launched an internal software that connects store owners directly with the warehouse, sales executives and the CEO in a single loop.
“Which order of what value has been received, which order has been rejected and why, who is the store owner, what is the track record of a store owner, what is his credit limit and what he owes to us is all available on a single click,” he said.
“All our four warehouses are now controlled by bar-coding, QR codes and RFID technology and every unit of medicine is being watched for its expiry date, movement inside and outside the warehouse.”
So, Is this the failure of the scheme ? This is the failure and criminality if the people entrusted bto implement it.. Aren’t these people also part of the Aam Janta ? Making small gains at the cost of larger good is engrained in our psyche..We get what we deserve !!