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The Multi-faceted Gujarat Groundnut Scam

With repeated fires in warehouses under suspicious conditions alongside adulteration of groundnut sacks, the whole procurement process is mired in controversies.
Groundnut Scam

In the last few months, a series of irregularities and malpractices, in relation with the groundnut procured by the Gujarat government last year, have surfaced. According to the opposition Congress party’s allegations, it is a multi-crore scam by the ruling Bharatiya Janata Party. From January to May this year, four incidents of fire at different warehouses in Gondal, Shapar, Hapa and Gandhidham in the state occurred where groundnut stock worth Rs. 50 crore was reportedly gutted and the police investigations have unearthed adulterated groundnut stock in various warehouses.

Under pressure from several quarters, Chief Minister Vijay Rupani’s government ordered a probe into the repeated warehouse fires. A commission headed by H.K. Rathod, a former judge of the Gujarat High Court, is investigating the case.  So far, the state police have arrested 30 persons including Magan Zalavadiya, GUJCOT (Gujarat Cooperative Cotton Federation Limited) and warehouse manager for Saurashtra zone. Reportedly, investigators found transactions worth several crores in Zalavadia’s bank accounts when the procurement was underway last year.

Days before the 2017 Gujarat assembly elections were declared by the election commission, the BJP government announced Minimum support price (MSP) of Rs. 4,500 per quintal for the groundnut crop and the central government directed the National Agricultural Cooperative Marketing Federation of India Limited (NAFED), country’s top cooperative body of marketing agricultural commodities, to procure groundnut stock at that cost. Following this, the state government had appointed GUJCOT, GUJCOMASOL (Gujarat State Cooperative Marketing Federation Limited), GUJPRO (Agribusiness Consortium Producer Company), Banas Dairy and Sabar Dairy to procure on behalf of NAFED. 

Subsequently, over 10.46 lakh metric tonne of groundnut amounting to Rs. 4,000 crore was purchased by the state government through 139 purchasing centres across Saurashtra region. According to the government estimates, the groundnut production in the state was around 32 lakh metric tonnes in 2017.

The procured stock was stored in 279 warehouses, of which, four warehouses caught fire under suspicious conditions. The state police investigating into the incidents found that in a private warehouse, which stored 31,500 sacks, each containing 35 kg of groundnut, were found to be adulterated with huge quantity of pebbles and sand. According to numerous reports, the traders are also refusing to buy the stock owing to the adulteration.

According to Paresh Dhanani, Congress MLA, and leader of opposition in the assembly, former Agriculture Minister Chiman Saparia was involved in the scam. “I suspect the scam points to even the Chief Minister’s Office (CMO). Good quality groundnut was diverted to oil-mills owned by BJP supporters. The millers extracted oil from groundnut and then send oil tins to fry bhajiya during the Assembly election. We have written to CM Vijay Rupani and the Governor, but no action has been taken. We have been demanding an inquiry by a sitting judge of High Court. If the government is all-clean, why does it hesitate to form an inquiry committee headed by a High Court judge,” Dhanani was quoted as saying.

Dhanani alleged that the officials of NAFED, GUJCOT along with local politicians and middlemen stole and sold off the groundnut procured to oil millers run by BJP supporters.

Earlier in August, NAFED chairman Vaghji Boda accused the state BJP government of indulging in “white corruption” during groundnut procurement. Boda questioned why the state government chose GUJCOT, which was a bankrupt entity, for procurement.  

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