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Functioning of JKMSCL: CAG says its purpose of setting up has been defeated

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Srinagar: The Comptroller and Auditor General of India has made scathing remarks on functioning of the Jammu & Kashmir Medical Supplies Corporation, saying the purpose of setting up it has been defeated.
“There were delays in finalisation of rate contracts and consequent delay/ non-procurement of medicines/drugs, instruments, machinery, equipment; thereby defeating the purpose of creation of the Company,” reads the CAG report on functioning of Public Sector Undertakings in Jammu and Kashmir.
In May 2013, J&K cabinet cleared a proposal for setting up Jammu and Kashmir Medical Supplies Corporation Limited (Company) for procurement of medicines and equipment for government hospitals in the State.
It was incorporated on 5th March 2014 under the Companies Act, 1956 and functions under the administrative control of the Health and Medical Education (HME) Department.
The CAG report reveals that 59 percent procurement of drugs, machinery, equipment and were done by heads of department in Health and Medical Education and only 41 purchases were made by the Corporation.
“Out of total expenditure of Rs 573.63 crore incurred by the 113 Heads of Department in HME Department for procurement of drugs/medicines, machinery/ equipment, furniture etc. during 2014-15 to 2017-18, only Rs 236.07 crore (41 per cent) were transferred to the Company and procurements worth Rs 337.56 crore (59 per cent) were made by these HoDs themselves, which indicated that the objective of relieving the service providers of the extra burden of purchase/ distribution was not served,” reads the report.
The PSU was set to relieve the service providers (head of the departments/Doctors) of the additional burden of procurement and distribution process.
The audit also observed that there had been delay in finalisation of Annual Rate Contract (ARC) leading to delay in procurement of drugs/ medicines/machinery/ equipments.
“In first phase, the Company invited tender for the procurement of drugs/ medicines/ fluids comprising 870 items (increased to 9404) in June 2015, January 2016 and July 2016, out of which the Company finalised ARCs for only 592 items (63 per cent) in three instances during November 2015 and June 2017 by taking time ranging between 87 days and 320 days after issue of NIT (Notice Inviting Tender). Similarly, out of 723 items advertised (February 2017) in second phase, the ARCs for only 362 items were finalised during November 2017 and March 2018 by taking time ranging between 273 days and 403 days. Delay and non-finalisation of ARCs in respect of 348 drugs and medicines in first phase and 361 drugs and medicines in second phase implied that these items could not be procured by the Company for the indenting Department, thereby defeating the purpose of creation of the Company,” reads the report.
The audit reveals that JKMSCL had not prescribed anytime-line for finalisation of technical/ financial evaluation, meeting of the State Level Purchase Committee (SLPC) and issuance of ARC in its Standard Procurement Procedures (SPP). (KNO)

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