The LDF government in Kerala has always held up the payment of social security pensions (SSPs) to over 60 lakh beneficiaries as one of its biggest triumphs. Now, the Comptroller and Auditor General report on Direct Benefit Transfers of SSPs has stated that nearly half such payments - the direct to home payments made through the agents of Primary Agricultural Credit Societies (PACS) - are susceptible to fraud.

The report was tabled in the Assembly on Thursday. The period under audit was 2017-18 to 2020-21. During this period, a total of Rs 29,622.67 crore was disbursed as SSPs under five heads: Indira Gandhi National Old Age Pension, Indira Gandhi National Widow Pension, Indira Gandhi National Disability Pension, Pension for Unmarried Women above 50 years and Agriculture Labour Pension. The first three has a small percentage of central government support, the last two is fully paid by the Kerala Government.

Of the total, Rs 15,312.33 crore, 51.69 percent, was transferred directly to the bank accounts of beneficiaries and Rs 14,310.34 crore, 48.31 percent, was paid in cash to the beneficiaries by PACS agents right at their doorsteps. According to the government, the 'direct to home' (DTH) mode was adopted because many beneficiaries did not possess a bank account.

"In respect of DTH disbursements, only the signature/thumb impression of the beneficiaries are obtained as acknowledgement by the PACS agent (who hands over the money)," the CAG report said. "The absence of an automated beneficiary-wise acknowledgement had resulted in the possibility of fraud," the report added.

In fact, the CAG did detect fraud. In Varkala Municipality, for instance, in three cases, the pension was shown as paid after the death of the beneficiaries. "This has resulted in irregular payment of pensions amounting to Rs one lakh," the report said.

The Audit team visited the Varkala Service Cooperative Bank and scrutinised the acknowledgements, or the signatures or thumb impressions, of the beneficiaries kept at the PACS.

As proof of fraud, it was found that "different types of signatures and thumb impressions were recorded against the acknowledgement column of the same beneficiary. "It was also noticed that most of the amount were remitted by the same person," the report said. "Under these circumstances, Audit suspects the possibility of fraud in respect of these transactions," it added.

Realising that the DTH mode is prone to corruption, Varkala Municipality conducted its own audit and found that 38 beneficiaries were paid SSPs after their deaths.

The CAG report said that money paid through the DTH mode could not be considered as Direct Benefit Transfer. DBT, as elaborated in Rule 87 of General Financial Rules, 2017, stipulates that transfer of benefits should be done directly to beneficiaries. The report then spoke about the need to "minimise intermediary levels" and reduce delay in payments to beneficiaries with the objective of "minimising pilferage and duplication".

The report has also recommended that the PACS should report the cases of deceased to the concerned local body.

But even after this is done, certain local bodies continue to transfer money to PACS for dead beneficiaries. "On an analysis of SSP disbursement data table for the period from 2017-18 to 2020-21, it was noticed that funds were transferred to PACS in 6.8 lakh transactions to 96,285 beneficiaries who were reported as dead by the PACS two to 20 months earlier," the report said. This happened because the deceased beneficiaries were not removed from the list by the secretaries of local bodies.

"The irregular transfer of funds in respect of cases reported as deceased is of grave concern as it could lead to potential fraud and misappropriation," the report said.