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J&K Administration Attempts to Refute IAS Officer’s Charges of Corruption in PM-JAY 

The administration went on record with the LG himself appearing to try and brush off allegations. But serious questions remain. Even before IAS officer Ashok Parmar, the CAG had pointed to 'financial discrepancies' in the PM’s flagship scheme, PM-JAY earlier this year.
J&K L-G Manoj Sinha. Photo: X/@manojsinha_

Srinagar: Lieutenant Governor Manoj Sinha’s administration has responded to IAS officer Ashok Kumar Parmar’s allegations of irregularities in the implementation of Pradhan Mantri Jan Arogya scheme (PM-JAY) in Jammu and Kashmir. 

A spokesperson of the J&K administration said that “a thorough examination of irrefutable facts and figures refutes baseless claims” made by Parmar in his letter to the Central Bureau of Investigations which alleged irregularities in the insurance contract. 

But gaps remain in the administration’s telling of what steps they took versus what the contract allowed them to do. A local paper has written about the findings of an Anti-Corruption Bureau, but they do not seem to pertain to the specific charges levelled by the IAS officer. The findings of a CAG report earlier this year have also cast a cloud over how the PM-JAY functioned in the UT. The CAG report also says measures had been suggested to the J&K administration to bring an end to “financial discrepancies.”

What was the IAS officer’s allegation?

As first reported by The Wire, the letter written by the IAS officer has alleged that the Sinha-led J&K administration violated the terms of contract by giving a 15% addendum to Bajaj Allianz. The company was awarded the three-year-contract on December 26, 2020. 

Bajaj Allianz had sought to pull out of the contract in September 2021, less than a year after it came into force, by reportedly citing losses. But the state administration offered 15% addendum to the existing contract for four more months ending March 2022.

The administration spokesperson said that the term of the policy was three years “with the option of annual renewal upon mutual agreement.” 

But the policy document states that the contract “is subject to renewal after two years”. (emphasis added)

So the contract was renewed before one year despite the contract saying it is subject to renewal only after two years. In addition, the Sinha-led administration took no action against Bajaj Allianz when it applied to terminate the two-year contract in the first year itself.  

Instead, the administration, which is run directly by the Union government, offered Bajaj a 15% addendum. According to Parmar’s letter, the decision was taken in violation of the financial rules and despite objections by J&K’s law and finance departments. 

Also read: J&K Admin Ignored Own Depts’ Advice to Amend Multi-Crore Contract to Favour Private Co: IAS Officer

‘Interim arrangement’

The J&K administration defended itself, citing that it had followed relevant advice from all internal departments.

“The interim arrangement was thoroughly vetted by the Law department, Finance Department, and Learned Advocate General, contradicting claims that the government ignored advice from its own departments,” the spokesperson said. He added that the ‘interim arrangement’ was the “most cost-effective option, serving public interest during the transition period.”

The administration offered Bajaj Allianz Rs 3,261.60 per family unit between December 2021 and March 2022 on a “Stop Loss basis”. IFFCO Tokio General Insurance Company, which had emerged as the lowest bidder with a quoted rate of Rs 1840 per family in 2021, was awarded the contract in 2022. 

While the administration said that the “interim arrangement” with the Bajaj Allianz was made to “prevent service disruption” due to “the imminent expiration of the policy”, it didn’t explain why the administration didn’t refund the claims itself by appointing nodal officers in empaneled hospitals rather than hiring a broker (Bajaj Allianz) to do it.

The administration also failed to explain why the “generous period of 22 days was allocated for bid preparation and submission” when it could have done so with urgency to ensure any disruption of services.

The J&K administration spokesperson said that the contract caused “substantial loss of Rs 93.82 crores” to Bajaj Allianz. 

However, an official told The Wire earlier, “Insurance companies cannot claim that they are running into a loss due to a particular insurance policy for J&K as that is what insurance is all about. Diversification leads to its viability,” effectively, saying that the argument holds no water in the insurance world.

Number of beneficiaries

The administration also sought to contradict the claims made by IAS officer Parmar that the number of beneficiaries during the interim period increased by 1,087,108. The spokesperson said that the increase in beneficiaries was “consistent throughout both the primary policy and the interim period”. 

However, the spokesperson didn’t cite any figures. 

Reacting to the story which appeared in The Wire on the alleged irregularities in PM-JAY scheme, Sinha said that the Bajaj Allianz was paid Rs 982 crore as premium by the administration while the company disbursed claims amounting to Rs 1228 crores. 

A local newspaper published out of Srinagar, elaborating on the J&K administration’s stand has  reported that the Anti-Corruption Bureau had investigated the matter. Citing the ACB probe, the paper says:

“It (ACB probe) revealed that the total premium paid to Bajaj during the whole policy period, with effect from 26 December 2020 to 14 March 2022 including interim arrangement on stop loss basis was Rs 304.59 crore. The total claims payout to hospitals by Bajaj was Rs.398.41 crore. This simply means that the insurance company has suffered a loss of Rs 93.82 crores”. 

But IAS officer  Parmar’s letter is about the alleged scam playing out between December 2021 and March 2022 and refers to Bajaj Allianz being granted an additional 15% in alleged violation of financial rules. 

Also read: J&K: Why a Top IAS Officer Has Sought a CBI Probe Into the Flagship Jal Jeevan Mission

CAG pointed out financial discrepancies 

Earlier this year, the Comptroller and Auditor General (CAG) of India has said that the PM-JAY scheme is marred with irregularities and measures have been suggested to J&K administration to bring an end to financial discrepancies.

The CAG report said that during 2018-2021, 16865 and 335 numbers of ineligible beneficiaries respectively were identified by State Health Agency (SHA), the nodal body responsible for implementing the scheme in J&K, after clearing the SECC data, suggesting that ineligible beneficiaries had made it to the SECC database.

The CAG report states that Rs 10.96 lakh were disbursed for the treatment of 48 patients who had previously been declared deceased  while 459 beneficiaries were charged for their treatment in empanelled hospitals.

The report also states that the SHA failed to levy penalties amounting to Rs 20.93 crore on the insurer for non-performance of various activities. “Since no penalties were levied by the SHAs, no such recoveries were made from the defaulting hospitals, thereby not deterring the hospitals from deviating from the performance indicators specified under the scheme,” the report said.

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