The district police have reported large scale illegal diversion of subsidised foodgrains meant for sale to ration card holders at nominal rates.

Deputy Superintendent of Police, Neyyattinkara, Y.R. Rustom has reported to State government that a well entrenched Kerala-Tamil Nadu border-based mafia profited from the racket.

They included owners of factories that sold branded rice, units that made rice-based ‘instant food’ products, and a set of ration wholesale and retail dealers.

The police said the group made a “twenty fold” profit on every kilogram of boiled and raw rice they diverted from the public distribution system.

Subsidised rice meant for sale to ration card holders at insignificant rates ranging from Rs.1 to Rs.8 for a kg were retailed in supermarkets and malls as packaged rice priced at Rs.40 and above for a kilogram.

FCI godowns

The illegal diversion took place at FCI warehouses and premises of rational wholesalers and retailers.

All transactions relating to subsidised foodgrains were just on paper. There was little physical movement of foodgrains from the FCI warehouses to wholesale dealers and from them to ration retailers and finally the public.


The illegally diverted rice grains ended up in factories in Palakkad, Kalady and Karnataka.

Investigators said fraudulent public distribution system (PDS) retailers even used ration cards of recently deceased persons and fudged entries in daily sales ledgers to illegally divert foodgrains and kerosene for sale in the open market.

Subsidised kerosene, retailed to ration cardholders at Rs.14.50 a litre, fetched four times its price in the black market.

It ended up as fuel in fishing boats, standby power generators in marriage halls, cinema theatres, shopping malls, and earthmovers.

The day of inspection

The police said the sales records at several PDS retail outlets they inspected ‘curiously’ showed that 90 per cent of ration card holders had availed themselves of their quota of fuel and grain on the same day, which invariably fell at the end of every month when rationing inspectors routinely arrived to ‘verify’ stock.

Separate report

In a separate report, the Vigilance and Anti-Corruption Bureau has told the State government that District Supply Officers needed to stringently inspect FCI warehouses and premises of PDS dealers.

Most of them maintained surplus stocks of subsidised foodgrains and fuel.

Illegal diversion of foodgrains was reported most from PDS outlets in the coastal belt of the district.

Investigators also found that a bulk of the illegally diverted wheat ended up in factories in Tamil Nadu where it was processed and exported as labelled cattle feed priced at Rs.50 and upwards a kg.

Keywords: PDS rice racketFCI