CAG report uncovers ₹23.81 crore corruption in MP’s relief funds

In 1968, American political scientist Samuel P. Huntington shared a bold idea– a little corruption in government could actually help things work better. He compared it to “grease” that keeps the wheels of a slow system moving. In March 2025, the Comptroller and Auditor General (CAG) released a report on Madhya Pradesh—and it seems the system there is running all too smoothly on Huntington’s “grease.” The report exposes widespread corruption in the disaster relief system for farmers in Madhya Pradesh who lost crops to natural disasters. It shows serious failures at many levels of the state bureaucracy. Since the report covers only 13 out of 55 districts, the actual scale of the problem could be much larger. 

Key findings show that legitimate farmers faced significant delays in receiving payments, while numerous cases of fraudulent claims were processed quickly. Officials allegedly diverted funds through fake beneficiary accounts.

The corruption allegations have undermined the effectiveness of government relief schemes designed to provide critical support to the agricultural sector during times of crisis. Despite substantial budget allocations, the investigation found that aid rarely reached those who were most in need.

State authorities have not yet responded to these allegations. Agricultural experts warn this corruption could further destabilize rural economies, which are already burdened by climate-related crop failures.

Core of the matter

Madhya Pradesh government has run several relief programs from time to time with the intention of providing financial support to farmers who have lost their crops due to floods, hailstorms and other natural disasters. In 2018, four relief programs were started to compensate for the damage caused to crops for the following natural calamities–  floods, excessive rainfall, drought, and pests. 

Between 2018 and 2022, the government allocated ₹10,060 crore for four disaster relief programs– flood and heavy rainfall relief (2018), financial aid under RBC 6-4, drought-related crop damage assistance (6422), and support for crop loss due to pests (7249). According to the report, 86% of the total funds have already been spent.

In the memorandum issued by the government, it was said that more than 1 crore farmers of the state have benefited from these programs, which proves these programs to be more or less successful. However, a closer look at these expenditures reveal that this amount did not reach those who needed it. Instead of the victims, the relief amount was deposited in the accounts of employees and their family members.

For example, in 13 districts including Sehore, Khandwa, and Satna, fake payments totaling over ₹23 crore were made. While the names used were of real farmers, the money was sent to bank accounts that didn’t belong to them. These transactions were carried out through digital payments.

Such cases are most common in districts like Sehore, Shivpuri, and Dewas. In Sehore alone, 45 fake payments were reported across the tehsils of Ichhawar, Rehti, and Ashta, involving over ₹1 crore in misused funds. Of these, 11 payments were made to government officials or their relatives, while the remaining 34 went to unauthorised individuals.

Take, for example, two specific cases from Sehore. Relief amount of more than 29 lakhs has been made to Rakesh Singh and Mohan Singh Ghasiram of Sehore, but this amount has been received by Pramod Chaurasia. The second case is of a fake payment of 15 lakh 64 thousand rupees. In this case, the actual beneficiaries are Premnarayan, Ramesh, and Shivcharan, but the amount was received by someone named Sushil Kumar Raikwar. In both these cases, 'relief amount' of about 41 lakhs has been distributed by making more than 100 transactions in four years.

These are just a few examples of how huge amounts of corruption have taken place in the name of one person. It is worth noting that in all these cases, the DDO (Drawing and Disbursing Officer) is the collector of the district and the Tehsildar of the area, which shows that this corruption is not the handiwork of any low-level employee.

Apart from the irregularities, there have also been significant delays in transferring relief funds to farmers in eight districts, including Sehore, Vidisha, Raisen, and Dewas. A total of ₹563 crore was allocated for around 6.9 lakh farmers in these areas. However, the payments were delayed by anywhere from six months to two and a half years before reaching their accounts.

Similarly, in Sehore district, the crops of 97,000 farmers were damaged by pest attacks between June and August 2020. To help them, a relief fund of ₹96 crore 10 lakh was set aside. However, the payment was delayed, and farmers received their compensation after a year. This delay shows that the main purpose of the relief program was not fulfilled.

A system full of flaws

When a crop is damaged by a natural disaster, the Patwari (village registrar or village accountant) inspects the damage and informs the Tehsildar, who then submits a report to the Collector. Based on this report, the Collector forms a joint survey team consisting of horticulture and agriculture officers, who assess the loss by visiting the affected fields. The team then determines the relief amount based on the extent of the damage.

Once the assessment is complete, the Tehsildar prepares the loss sheet (Haani Patrak). If the relief amount is up to ₹50,000, the Tehsildar approves it directly. For amounts exceeding ₹50,000, the approval is sent to the SDO or Collector. Many of the transactions highlighted in the CAG report involve amounts above ₹50,000, suggesting the involvement of senior administrative officials in this scam.

It's important to note that the Tehsildar and Collector transfer the relief funds using the IFMIS (Integrated Financial Management Information System). This system keeps track of all government financial transactions in one place, making it easier to monitor. However, there are several flaws in the system that can increase the chance of corruption.

 For instance, if the audit report's observations are to be believed, the report has highlighted several serious problems in the government's financial management system (IFMIS). For instance, since 2012-13, the state has used "global budgeting". Global budgeting removes individual spending limits for a DDO. This allows them to spend freely within the overall limits of the departmental budget.

On the other hand, there are many flaws in the refund process in IFMIS. Let us try to understand these flaws in simple language. Suppose a payment of relief amount has failed. In such a situation, the refund process is started. But in the current system, there is no automatic verification to ensure whether the refund has reached the right people or not. For this, officials have to check manually, which increases the risk of fraud.

Similarly, payment approvals are still written on paper, then scanned and uploaded into the system. Even though the system can generate these approvals electronically, that feature is not being used. This opens the door to corruption, as any scanned document can be uploaded without proper verification.

For disaster relief payments, officials are required to survey the affected areas and create detailed reports. This states what compensation each victim should receive. However, these crucial documents were not attached to the payment bills given to the auditors. This made it impossible to verify whether the right people received the money.

However, the government argued that it was not possible to process these documents in the system. According to the government, the upload limit of the system is only 2MB. Since these documents were in very large numbers and had large file sizes, it was not possible to process them.

The auditors rejected the government's explanation. The CAG noted that the documents were not even attached to the physical bills, and the government implemented computer systems with severe limitations. These flaws ultimately led to suspected fraudulent payments of ₹23.81 crore (about $3.2 million) from disaster relief funds.

Cost of delay 

Farming depends completely on the weather. Any natural disaster can be a big setback for a farmer. Unseasonal rain or hail storms can destroy months of hard work. When crops fail, farmers often don’t have enough money to plant the next crop. This pushes them to take loans from the market, even at high interest rates. If the next crop also fails, they borrow again. Slowly, they get trapped in a cycle of debt.

In such situations, timely relief from the government can make a big difference. It can help farmers avoid falling into debt and give them a fresh start.

During the audit period from 2017 to 2021, Madhya Pradesh was one of the worst-affected states by natural disasters. In these years, about 67.15 lakh hectares of farmland in the state were hit by such events.

Although the government launched relief programs, they were soon caught in the web of bureaucracy and corruption. Research shows that nearly all those affected by these natural disasters faced severe consequences. Around 80 percent of the farmers were unable to prepare for the next crop due to the lack of timely financial support.

In the end, the relief money that should have reached farmers on time either never came or arrived far too late. The CAG report on Madhya Pradesh reveals widespread corruption. It shows that senior district officials openly violated rules laid out in the Madhya Pradesh Treasury Code (MPTC), the Madhya Pradesh Financial Code (MPFC), and several other regulations. In many cases, the so-called "grease" of corruption made the system run—but not for the benefit of farmers. Instead, the relief funds got stuck in bureaucratic files, never making it to those who needed them most. 

Edited by Diwash Gahatraj

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