Friday, 25 September 2015

CSD, Profits, and Armed Forces

Canteen Services for Defence Forces & What happens to the Profits

          Recently we read a piece from Dr. Dheeraj Sharma, a Professor in IIM-A, who includes a stint as consultant to the Army (actually the Army Training Command – ARTRAC) and also with MHA in his curriculum vitae. The professor’s forte appears to be marketing, which is the subject he is teaching.

          A bit late, but better than never, here is the result of my preliminary scouring of the internet (with the source) which I hope the professor will have the time to read.

 From Notes on Functions of CSD & Role of CDA (CSD) Mumbai from CDA CSD Trg Material Oct 2012

          Board of Control, Canteen Services

          Chairman:           Raksha Mantri

          Vice Chairman:  Rajya Raksha Mantri

          Members:         1. Defence Secretary
                                      2. Financial Adviser , MoD (Finance)

                                      3. Quarter Master General, Army HQ

                                      4. Chief of Personnel, Navy
5. Air Officer-in-Charge, Administration, Air HQ

          Secretary:            Deputy Director General, Canteen Services, QMG’s
                                      Branch, AHQ

Executive Committee of Board of Control

          Chairman                   Additional Secretary, MoD (Finance)

          Members          Joint Secretary (O/N), MoD

Additional Financial Adviser MoD (Finance) dealing with CSD Matters

Quarter Master General

Chairman, Board of Administration & GM, CSD

Representative of Air Force (equivalent to rank of Maj

Representative of Navy (                ditto                     )

          Secretary:            Deputy Director General Canteen Services

How are the Profits Distributed
Ministry of Defence
Canteen Stores Department (CSD) : Turnover and Profit of Defence Canteens
PIB: Turnover of Defence Canteens.
Turnover, Profit and Profit distributed to beneficiaries after depositing 50% in Consolidated Fund of India (CFI) of Canteen Stores Department (CSD) during the last three years, year-wise, is as under:-
(Rupees in Crore)
Profit distributed to beneficiaries
Annual accounts for this period are under finalization
As per laid down policy, 50% of the total profits earned by CSD is being deposited into Consolidated Fund of India (CFI).
The remaining 50% is distributed to various beneficiaries as determined by the Competent Authority.
As per policy in vogue, after deduction of regular and adhoc allocations of 4.91 % of this amount, the balance is allocated to Army, Air Force, and Navy in the ratio of 85:10:5.
This information was given by Defence Minister Shri AK Antony in written reply to Shri Ram Krjpal Yadav and Shri Shadi Lal Batra in Rajya Sabha.
Continuing the Quest for Information
A RTI request is being filed to obtain information on the share of CSD profits given by the Competent Authority to the Defence Civilians Medical Aid Fund (DCMAF) and the expenditure incurred in FY 2012-13, 2013-14, and 2014-15.
Similarly, a RTI request is being filed to obtain information on the share of CSD profits given to the   Sanskriti School run by wives of bureaucrats and the expenditure incurred in FY 2012-13, 2013-14, and 2014-15. 
Finally, a RTI request is being filed to obtain information on the share of CSD profits used for Chai pani within the MoD, as well as generous allowance given to bureaucrats for the purpose, that is not given to Service Officers under the Incidental and Miscellaneous head(s) and the expenditure incurred in FY 2012-13, 2013-14, and 2014-15.
*        *        *        *        *        *


  1. It is very unfortunate that the bureaucrats in MOD have now started extending their hands over the Canteen profits. They may or may not be aware of the evolution of the canteen in Indian armed forces. Since it has now become lucrative every one in MOD is not trying to grab it.As a presiding officer of Board of Officers for drafting SOP on canteen, convened by Cent Comd at the orders of AHQ on the basis of HSC judgment dated 04 Jan 2001, I have very clearly brought out the issues in the board proceedings. The contents of the Board Proceeding drafted and signed by me have been issued as SOP by all three forces. It is large draft and need to be covered in 2 to 3 posts, which I am putting it here in next post for information.

    1. There is a clerical mistake in this sentence.
      Since it has now become lucrative every one in MOD is not trying to grab it.
      In the above sentence "MOD is not...." kindly read it as MOD is now"

  2. The Canteen Stores Department was in existence in the Country even during pre-independence days. Prior to World War II, the retail trade in the Defence Services was in the hands of the contractors. During World War II, a regular cadre called, "Indian Canteen Code" was formed and brought into existence under the Canteen Services (India) to handle retail trade in operational areas where the contractors were not expected to go. After 1947, the Canteen Services (India) was split into two, namely, the Canteen Stores Department (India) and the Canteen Stores Department (Pakistan). The retail trade in the units, however, was reverted to the contractor. Contd in next post

  3. Contd......
    After independence from 1948 onwards the Canteen Stores Department (India) started functioning under Ministry of Defence. It was brought under Ministry of Defence initially for three years on experimental basis (unquote - it was the first mistake by the armed forces in accepting it) and later from 1950 onward it has been functioning under MOD on permanent basis (unquote - the second and final mistake done by the armed forces in accepting it). But till late fifties, the retail trade was being handled by the contractors only. During this time, when Gen KS Thimmayya, DSO, took over as QMG, he gave detailed thought to providing canteen facilities to the troops at the unit level as the then retail outlets being in the hands of the unit canteen contractors, the margin between the wholesale price and the retail price of goods went to the contractors where as the amount if held, in the hands of individual Commanding Officers of the units in the armed forces could be utilised for the welfare of the troops. The case was, therefore, made out jointly for taking over of Contractor Run Canteens by units and formations, so that the profits earned on the sale of canteen stores could be retained with the units and formations. While the contractors put considerable objection to the said proposal, but the Government agreed to the proposal moved by Gen Thimmayya, DSO. The concept of Unit Run Canteen, therefore, became as an accepted doctrine, though the changeover took considerable time for implementation. Thus the concept of Unit Run Canteen was born and subsequently , the contractors were driven out. Unquote - do we ever find such daring officer like Gen Thimmayya DSO who got his proposal implemented by the government. Had such officer been in service today I don't think the MOD civilian crowed tried to put their hands over the profits. Contd

  4. The CSD(I) functioning under MOD from 1948 onwards on experimental basis remained so on permanent basis after 1950. Right up to 1977 the legal status of the same remained nebulous. For functional purpose, it w as a commercial undertaking but for actual practice, it was treated as department under MOD. The result was that the terms and conditions of employees presented various and numerous problems, which quite often became a source of discontent and unpleasant employer-employee relations.It was at this time, the rules regulating the terms and conditions of service of the employees were framed. The CSD(I) was then renamed as Canteen Stores Department (CSD). It employs a few serving officers of the armed forces on deputation. The remaining work forces comprises civilian government employees covered under CCS Rules. The CSD Depots do not come in direct contact with its customers. It serves its customers through Unit Run Canteens. Contd.....

  5. Very important ,most relevant issue & subject , closely connected to on going issues of
    Defence and related matters incl pay & pension matters of all soldiers ( orop without NFU is a small issue ) ,both retd & Armed..
    Yeah,let all the facts and figures surface and there would be light in all these areas of psudo- secrecy under false notion ,interpretation and application of provisions of official secret Act and Army Act.
    About quantum of profit on turnover of about 9000 cr say 200 is also open for analysis and Inferences.Even in that low profit of 200 cr -see .... Further there are profits in URCs& sta ,fmn ... at all levels .??????.
    Look at all those Comm, chair men, members...etc ,all bureaucrats & tigers (nominated/ choosen ) at pts of time and place .
    It is time to live and die as honest and honoura le persons in Indep India.
    These facts and truth should give strength to corrections and resolutions to on going issues.

  6. The Army HQ vide Army Order No 584/73 as amended vide Army Order 5/97 have issued directives to all formations, est and units running URCs not to employ the troops to run the URCs. No manpower was authorised and posted for the purpose. The fmn, est and units have, thus, started employing civilians on temporary basis to run the URCs. The civilian employees in URCs were given the status of Regimental Employees as they were being paid out of non-public funds . These civilian employees , through the local tribunals, have moved Honourable Supreme Court for granting them the status of Government Employees. The Honourable Supreme Court of India while setting aside the directions of Tribunal that the employees of Unit Run Canteens should be given all the benefits including retiral benefits of regular government servants, however, hold that the employees of the Unit Run Canteens will draw the minimum of the regular scale of pay available to their counter-parts in CSD. The URCs are being run with their own capital built up over the years. No government aid whatsoever is available for running URCs by the units. The status of URCs is purely a sainik welfare project but not any government project. Whatever profits earned which are very meager are being spent on troops welfare measures.

    CSD though it is government Org functioning under MOD, it runs the business on no-profit-no-loss. Whatever small percentage of profits the Depots charge on whole sale is gain paid back to the URCs in the proportion of their purchases over a year after leaving certain funds to compensate local, handling expenses and the losses in storage.

    But it is very strange to here now as to how many crores of rupees are being diverted for other projects and ventures which are not yet all connected to the armed forces personnel.Any profit arriving into the CSD is the heard earned money of the armed forces troops. No civilian authority could utilize such welfare funds meant for armed forces personnel for any other purposes. This is a matter which has to be taken as serious issue by the services Headquarters and ask for the justification or else knock at the judiciary to curb such unauthorised diversion of funds of the jawans. Jai Hind

  7. Rti shud be filed at mod level by our Delhi friends to know diversion of csd funds by mod babus

  8. In 1973 the bureaucracy or you may call it as civilian employees grabbed the jawans pensions and improved their own pensions. We could not do anything so far in last over four decades.

    The history and evolution of Unit run canteen say that these facilities are only for armed forces personnel, slowly slowly this bureaucracy extended these facilities and now putting their hand to grab the profits made by the CSD. This is a fit case for service Headquarters to show to the bureaucrats their way. The canteen system was introduced only for armed forces personnel. (Se the history of the CSD in my posts right from ancient era of prior to world war II and the era of Britishers rule.

    If we loose sight of this issue, we will always keep loosing our demands, whaty to talk of OROP.

    This CSD profit diversion case can book every bureaucrat and civilian employee of the MOD and even MHA and MOD for extending this facility to paramilitary forces. No CSD facility is available for civilians as per its meaning, definition, invention, the purpose of its creation, the service by units to civilians at from their private funds being spent on running URCs.

    If we want our demands let us first corner the MOD in diversion of CSD profits. Please book the cases in Honourable Supreme Court in consultation with our counselors after going through to the whole judgement of HSC of 04 Jan 2001 about the Unit Run Canteen employees. This can be well related to extending URC facilities to any one who is not either uniformed person and pensioner of the armed forces.

  9. Oh ! Great . lot of facts are surfacing -all in public domain ,for good .
    Skeletons in cupboards should be visible.
    Let rti and active veterans ( war / warier type ) get the truth in media of internet to rectify matters .If all these associate issues are resolved pay & pention issues will get automatically resolved. This is the crux of all issues and problems.
    One can see how netas,babus cultivate and place playable persons in those slots who silently sign /consent dirty work for them .
    Prescisely - this is modus operandi . now visible in veterans dissent gp of rival esms poped up and nourished by DTD ,like csd committees.
    As long as majority upright people allow these by being passive and silent ,it will go on and on. .

  10. Sir, I have also run Regimental Centre CSD(I) and CSD(I) Adelphy near Church Gate Railway Station in Mumbai(When all civilians gone on long strike in 1965/66 and exerted there upto late hours in the evening. These CSD canteen are purely for welfare of troops and employing few ESM. Now the time had come we get back MOD from civilian bureoucracy by reducing their strength just to 20% and posting Army, AF & Navy officers in the age group of 50 to 58 years and tenure of 4-5 years with Col, Brig & Maj Gen/Lt Gen/equivalents from AF & Navy ranks having differing experience in operational matters,equipment production/procurement, Ammunition production/handling, Infrastructure etc answerable through Chief of Defence Staff(*****) to Defence Minister. WAKE UP WAKE UP till more damage is done to Armed Forces & ESM fraternity.

  11. Wow this is new to me. Well skeletons are coming out of the closet

  12. Sir, these are some crucial realities that have remained hidden for too long a time in spite of being out in the open. The RTI initiative should prove to be an eye opener.

    But there are some important elements of CSD that need a thorough review, as I had tried to point out on an earlier occasion. Regardless of how profits get controlled and who mans the CSD organisation, there is a need for the cost value, of this benefit delivery mechanism, to be analyzed thoroughly following rigorous total quality methodologies.

    CSD is an important, some would say vital, constituent in the well being of armed forces personnel. It can be more effective through a rationalisation of processes that presently define and govern the system.

    There is no doubt in my mind that CSD should be for serving personnel and ESM and only them.

  13. Dear Dhoop and all, just keep waiting till we get reply to the RTI application made by the blogger. Then will see. I am sure the bureaucrats will certainly say in reply that the 50% CSD profits were those profits earned by CSD in sales to the defence civilians and the same was was transferred to the Consolidated fund of India from which fund the ladies of bureaucrats started some business and not 50% of the CSD profits earned by the AF personnel. Is not it a case of Mr Satyam company. Just keep thinking about this in the mean time. If such reply comes then our stand in first point is who permitted civilians of any government/department to have CSD facilities. I have clearly given in my posts and it is an authority, the CSD was invented to only for uniformed armed forces and for those armed forces civilians who serve in active service. In regard to active service kindly refer to Sec 3 of the Army Act and its rules. Later on the bureaucrats themselves have started getting benefits out of CSD. Carefully read my posts on evolution Unit Run Canteen out of CSD. This entire story is saved and locked in Honourable Supreme Court, read its judgement of 04 Jan 2001.

  14. Very sad.. Armed Forces are doing CSR since ages and now these guys want to come and spoil issues. They have cooperative stores why don't they manage them well themselves.