Myriad of Proxy Labour

Ramvilas Paswan

CAG report on FCI reveals loaders’ use of proxy labour to earn lakhs continues unabated

By Asit Manohar

The famous lakhpati loaders of the Food Corporation of India (FCI) continue to bleed the corporation dry, never mind multiple suggestions by myriad agencies to rein them in. The latest fault finding mission, by the Comptroller & Auditor General of India, has laid bare the same rot which has been eating away at FCI for years. The CAG found that in October 2015, 61 labourers at FCI earned more than Rs two lakh as monthly incentive and two among these loaders earned over three lakh in incentive! Their remuneration was in multiple lakhs for merely loading grain sacks!

Between January and March 2016, labourers ostensibly suffering from chronic ailments like paralysis, heart and kidney diseases at some depots of the Northern region earned incentives and overtime anywhere between Rs 90,836 and Rs 305,311!

The first instance of 61 labourers earning unbelievable incentives was found at FCI’s Dimapur depot, forcing CAG to conclude that there is widespread use of proxy labour — a charge often laid at FCI’s door but the government has done precious little about it, leading to siphoning off of large sums from the corporation by unscrupulous workers.

Proxy labour allows loaders to earn hefty incentives by showing an abnormally high number of bags loaded each day. The prevalent norm is 105 bags per day per loader but at Dimapur, CAG found that 97 ‘departmental labour’ handled over 66 lakh excess bags between April and December 2015. Over and above the 105 bags per person norm. What else explains this but the widespread prevalence of proxy labour, where unauthorised proxy workers are being used by the departmental labour to earn hefty incentives on each extra bag? CAG found each loader handling anywhere between 998-1776 bags per day – against the norm of just 105 bags.

In its report tabled in Parliament on Friday, India’s chief auditor has said FCI unnecessarily spent Rs 237.65 crore due to non-rationalisation of labour, deployment of costlier labour at depots and non-pooling of labour.

So what does the government have to say in its defense? In a written reply in Lok Sabha earlier this month, Consumer Affairs, Food and Public Distribution minister Ram Vilas Paswan said


         The recommendation of a high level committee that incentives to labour be capped could not be accepted since it would lead to delay in unloading at the railheads.

         In pursuance to the award passed by CGIT, Karkardooma, Delhi on 5 July 2016, the datum of departmental labour has been revised from 105 bags per worker per day to 135 bags per worker per day which has resulted in reduction of incentive to about 30 percent.

         As such there is likely saving of approximately Rs 200 cr per annum after implementation of revised datum.

What this means in effect is that there is no real action taken on weeding out this widespread practice of proxy labour being used by the workers to gain untold riches by merely loading grain sacks at FCI.

A committee headed by ex-Union minister Shanta Kumar had observed in 2015 that there was huge disparity in wages of various kind of labour force engaged by FCI. It had said that this was the consequence of the incentive system in notified depots and “widely used proxy labour. This must be fixed, either by de-notifying these depots or handing them over to states or private sector on service contracts and by fixing a maximum limit on the incentives per person that will not allow him to work for more than say 1.25 times the work agreed with him.”

FCI is a strange organization, with loaders are categorized into not one or two but four categories with varying degrees of incentives:


Get regular pay, overtime, incentives, PF, Gratuity. This category is the top of the heap. According to the CAG report, this category of workers costs FCI Rs 654 per metric tonne of handling.


Uniform piece rate with minimum guaranteed wages even on the days when there is no work. They also get benefits like PF, gratuity and overtime. This category of workers costs the FCI roughly a third or what the departmental labour costs, at Rs 214 per metric tonne.



Piece rate or daily minimum wages – whichever is higher but only for the days they are engaged for work. Other benefits like PF, Gratuity etc remain. This category of workers costs the FCI a fraction of what departmental labour costs: Just Rs 85 per metric tonne.


Private handling and transport contractors are awarded depot wise contracts for handling food grain. Obviously bottom of the heap, with hardly any earnings. The cheapest labour force available to FCI.

The CAG has found and illustrated numerous instances of fraudulent labour practices at FCI which are bleeding the corporation dry. It has recommended that departmental labour should be pooled in fewer depots and others should use contract labour. The other obvious recommendation is elimination of proxy labour through — proper documentation of prescribed details in the booking cum output slips, installing a biometric attendance system and CCTVs, and installing automatic red flag indicators for suspected abnormally high claims towards incentives.

Will the government pay heed? Already, FCI has been facing immense financial uncertainty since the Finance Ministry has not been releasing a majority of the funds – food subsidy – needed by the FCI to function each year. The CAG found that FCI would have saved Rs 35,701.81 crore interest burden between 2011-16, had the government released food subsidy on time. “On an average, only 67 percent of subsidy claimed was released by the Government of India over the last five years because of which FCI had to borrow from other costlier means of finance resulting in heavy interest burden of Rs 35,701.81 crore during 2011-16,” it said.

With huge indebtedness, FCI is obviously also facing rampant labour malpractices. While for the former, it has to depend on government’s largesse, FCI should be able to tackle the labour menace by now.