The state-owned Punjab Agri Export Corporation Limited (PAECL) purchased onions in June and July 2014 after the onion crop in Maharashtra was damaged by poor weather. This purchase decision has been criticised by the Comptroller and Auditor General of India (CAG) for not considering the ''commercial and safety angle'' and it resulted in losses of  Rs 27.9 million.

The Centre had advised the Punjab government to consider the desirability of procuring and storing onions at current price and releasing them to the market during a lean period when prices showed an upward trend. The Corporation purchased 1,500.413 MT of onions at a cost of Rs 36.3 million through a handling and forwarding agent during June and July 2014. "The whole operation, exploration of the market at Nasik in Maharashtra and appointment of handling and forwarding agent, was done on the recommendations of only one officer i.e. General Manager of the Company in contravention of the Purchase Procedure42 of the Company," CAG observed in its report.

The committees constituted for inspection of the quality, quantity and storage condition of the onions reported that due to lack of experience and adequate manpower for mandatory restacking of stocks after every two/three weeks and non sorting of rotten onions from the healthy bulbs, unavailability of special stores for onions and poor storage conditions etc., the stocks were being damaged, report said.

The committee recommended that action be taken for liquidation of the stock regularly in order to avoid further damage as fresh onion has a shelf life of 2-3 weeks. The Company sold 716.787 MT onions for Rs 8.4 million incurring a loss of Rs 8.9 million. The balance quantity of 783.623 MT (52 per cent of the total purchase) valuing Rs 19 million was damaged. "We observed that the Company before starting procurement did not consider its lack of experience and infrastructure for storing this commodity," the report said. "While appreciating the need for the State agencies to make market interventions to regulate prices of key commodities, we find that purchase was made without adequate experience and preparation," CAG said. Further, the Company was also not able to release the stock of onions in the market during the period the prices were expected to peak as more than 50 per cent of the procured onions were damaged due to improper storage, it further noted. "Thus, the decision to purchase onions without considering the commercial and safety angle of the operation caused a loss of Rs 27.9 million to the company," CAG said.

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