Rice millers balk at bank guarantee norm for CMR

Hyderabad: With the government all set to adopt a new policy on delivery of Custom Milling Rice (CMR), the rice millers opposed the proposal to furnish a ‘bank guarantee’ for CMR as a precondition.

The key aspects from the ‘operational guidelines’ for procurement of paddy and delivery of CMR, which were recently announced, are being vehemently opposed by the millers. Particularly, the precondition to furnish a ‘bank guarantee’ for an amount equivalent to the value of 25 per cent of eligible paddy allocation by the rice mill has been challenged, among other conditions. “Millers are not ready for this, as there will be huge losses if this policy is adopted. The condition of a 25 per cent bank guarantee will have an enormous impact on business, and the guidelines have failed to answer other technical aspects related to the tender process,” said B Bhaskar, leader of a Rice Millers Association in the State.

In the previous government, this was not the prerequisite for getting CMR done at mills. However, the present government has decided to adopt these stringent measures in view of millers defaulting on delivery of CMR, sometimes for more than a year, causing financial losses to the State government. Several State governments including West Bengal, AP, and Odisha, have adopted this practice. Even CAG (Comptroller Auditor General of India) recommended this mechanism about a decade ago, citing that this mechanism will be a ‘collateral security’ to safeguard against non-delivery of CMR or Levy rice. In a nutshell, the bank guarantee is a measure to prevent defaults and ensure that millers deliver the processed rice as required.

Amongst other conditions included in guidelines are of paddy to only those mills that are having blending or sortex machines for delivery of fortified raw or boiled rice to FCI, or Civil Supplies Corporation. And the deadline for installation of sortex machines has been set as December 31.

Meanwhile, on October 16, following a meeting of the cabinet sub-committee on paddy procurement, it was made clear that the defaulters of CMR would not be getting allocations of paddy for this Kharif. The committee emphasised that these tough measures would ensure accountability.