POS ration machines scheme under corruption scanner in MP:Linkwell firm paid ₹191 crore without tender, contract expired 5 years ago

An ambitious scheme launched in Madhya Pradesh to make ration distribution to the poor transparent and corruption-free has itself come under scrutiny. The Point of Sale (POS) machines, installed at every fair price shop to ensure transparency in the Public Distribution System (PDS), have allegedly turned into a steady source of income through collusion between government officials and a private company. The scheme was intended to prevent leakages and ensure that only genuine beneficiaries received subsidised food grains. However, serious questions are now being raised about how the system has been managed over the years. One company favoured statewide Officials are accused of showing extraordinary favour towards M/s Linkwell Tele Systems Private Limited. Not only was the company awarded work across the entire state, but it also continued to receive service extensions even five years after the original agreement expired. During this extended period, the company was paid over ₹191 crore for machine maintenance. It is alleged that these payments were made improperly and at inflated rates, resulting in a significant financial loss to the state exchequer. How did the process begin in 2015? The issue dates back to 2015, when the Madhya Pradesh government decided to modernise the ration distribution system. Biometric verification was made mandatory to ensure that only the rightful beneficiaries could collect rations. To implement this, the Madhya Pradesh State Electronics Development Corporation (MPSEDC), on behalf of the Food and Civil Supplies Department, floated a tender for the installation and maintenance of POS machines at ration shops across the state. The tender followed a Build-Own-Operate model, under which selected companies were required to purchase and install the machines at their own cost and operate and maintain them for five years. Payments during this period covered the cost of machines, installation, and maintenance. The contract was awarded to two companies, M/s Linkwell Telesystems Private Limited and DSK, which divided the state into two equal parts and began operations. Scam leads to monopoly In 2019, a major irregularity was detected in Bhopal, where ration was allegedly distributed to multiple individuals using a single biometric identity. This exposed vulnerabilities in the technology. Following the revelation, the department cancelled DSK’s contract and blacklisted the company. According to established rules, a fresh tender should have been issued for the vacant half of the state. Instead, officials directly handed over DSK’s entire workload to Linkwell Telesystems, without issuing a new tender. As a result, Linkwell, which earlier operated in only half of the state, gained control over POS operations across all of Madhya Pradesh. At the time, then Deputy Secretary B.K. Chandel justified the move by stating that the central government mandated biometric verification for ration distribution and that supplies to the poor could not be halted even temporarily. 6 extensions on the strength of one clause While the initial justification may have applied in 2019, subsequent developments raised serious concerns. In 2020, Linkwell’s original five-year contract ended. Instead of floating a fresh tender, the department repeatedly extended the company’s contract. Through repeated use of this reasoning, Linkwell continued operations across the state for an additional five years, raising questions about why a government department took over five years to finalise a tender. Payments continue despite cost recovery The alleged financial irregularities were highlighted in a complaint filed by Ankush Gindodiya of Indore. He argued that the original 2015 contract included capital costs for purchasing and installing machines, which were fully recovered by the company by 2020. From 2020 onwards, no new machines were required, and the company was only responsible for maintenance. However, instead of revising the payment structure, the department continued paying ₹1,254 per machine per month. According to the complaint, in other states, maintenance-only extensions are paid at ₹350–400 per machine per month. The continued higher payments in Madhya Pradesh are alleged to have resulted in undue financial benefit to the firm and loss to the public exchequer.