ESIC wasted Rs 10,000 cr by starting 22 medical colleges: CAG

The labour and employment ministry-controlled Employees’ State Insurance Corporation (ESIC) frittered away about Rs 10,000 crore in setting up 22 medical colleges, the Comptroller and Auditor General (CAG) has observed in a report on the government agency.

The Special Audit of Medical Education Projects of ESIC report is in its final stages and is expected to be tabled in the next Parliament session. A top government source said the exit conference procedure, where the ESIC was provided an opportunity to discuss the audit findings and to clarify any likely doubt, is also complete.

The colossal waste of public funds is also because the ESIC diverted from its core mandate of providing medical services through its network of ESI hospitals, dispensaries and diagnostic centres, and instead focused on setting up medical colleges, the CAG has pointed out. The report said the wrong selection of sites for the colleges resulted in the facilities and expensive equipment lying unutilised amid mounting maintenance costs.

Medical colleges were set up in Gulbarga (Karnataka) and Mandi (Himachal Pradesh), which did not even qualify for 500-bed hospitals. “A 500-bed hospital requires minimum four lakh insured persons as per ESIC norms. Mandi and Gulbarga had 41,000 and two lakh respectively,” the source added.

Amid the ESIC’s deteriorating health facilities, lack of hospitals, scarce beds and shortage of doctors and specialists, the organisation was flush with funds.

“In 2009-10 and 2012-13, ESIC transferred Rs8,000 crore from ‘Surplus’ to ‘Capital Construction Reserve Fund’... Spending less on providing core services (medical benefits and cash benefits) and using accumulated surplus for medical education (construction of medical colleges) is an issue of concern,” the CAG said.

Nor could ESIC utilise the services of its PG medical students despite taking a service bond of five years.

ESIC has admitted that the reason for the low occupancy of its hospitals was shortage of manpower and health care services being rendered.

For 2008-09 to 2012-13, while the number of insured people increased by 56 lakh, the number of beds actually went down by 488. Also, for the same period, while the capital expenditure on construction of hospitals, dispensaries, medical/paramedical/nursing college, etc., increased from Rs 214 crore to Rs 1,671 crore, the shortage of beds increased from 55% in 2008-09 to about 70% in 2012-13.

CAG’s suo motu action to audit ESIC’s medical education activity was started after an audit submitted in Parliament in December 2014 reported glaring irregularities.

On being contacted by HT, secretary of the ministry of labour and employment refused to comment.

The ESIC is an apex corporate body that operates the Employees’ State Insurance Scheme (ESIS), which is an integrated social security scheme providing protection to workers and their dependents in the organised sector in contingencies such as sickness, maternity and death or disablement due to occupational disease. Currently, about 186 lakh workers, or 67% of the country’s organised sector, is covered by it.