Investigators have uncovered a major financial fraud worth approximately ₹6.4 crore in Gwalior's cooperative sector, where government-provided gunny and plastic bags meant for public food distribution and farmers' crops were systematically misappropriated and sold illegally. The scam, which operated from 2016 to 2023 during both BJP and Congress administrations, has implicated 143 cooperative societies and their administrators now facing scrutiny in a high-level probe ordered by Chief Minister Mohan Yadav's office .
The comprehensive investigation, initiated in March 2025, has exposed a sophisticated three-tiered embezzlement operation within the District Cooperative Central Bank (DCCB) and numerous Primary Agricultural Credit Cooperative Societies (PACS). The fraud persisted for years despite local complaints, revealing significant gaps in oversight and accountability within the state's cooperative system .
Modus Operandi: Three-Pronged Embezzlement
The Cooperative Department's initial investigation has delineated how the fraud was executed at three distinct levels across the cooperative network:
Misappropriation of PDS Gunny Bags: Approximately 72 employees and 10 administrators across 72 societies allegedly sold gunny bags returned from Public Distribution System (PDS) shops, pocketing ₹2.62 crore instead of depositing the amount into society accounts. This operation functioned through direct collusion between salesmen and society managers .
Non-Return of Civil Supplies Bags: Forty-four cooperative societies failed to return bags supplied by the Civil Supplies Corporation, instead selling them in open markets over five years and generating ₹2.89 crore in illegal proceeds. The accused maintained confusing records specifically designed to mislead auditing authorities .
Diversion of Crop Procurement Bags: Twenty-seven societies misappropriated bags specifically meant for crop procurement from Markfed and other government agencies. These bags, intended for storing wheat, paddy, and mustard, were sold for personal gain, resulting in ₹89.39 lakh in losses to the public exchequer .
Investigation Challenges and Political Timeline
The probe, now under the state government's time-bound investigation list, faces significant hurdles that complicate establishing accountability and recovering funds.
| Challenge | Impact on Probe |
| Missing Records | Stock registers, ledgers, and cash books from 2016-2023 removed or tampered with |
| Deceased Accused | Some administrators and managers have died, complicating legal accountability |
| Incomplete Data | Food Supply Corporation has provided only 3 years of records out of 7 requested |
"The inquiry team continues to piece together missing records and trace those responsible," stated an official familiar with the investigation. "Authorities believe the total loss to the government may exceed ₹6 crore once all data is verified" .
The scandal remained unaddressed for years despite repeated complaints to local collectors and the Cooperative Department. The matter gained traction only after Chief Minister Mohan Yadav assigned Additional Chief Secretary Ashok Barnwal to lead the Cooperative Department in March 2025. During a Gwalior visit, Barnwal met former minister and ex-chairman of Gwalior Cooperative Bank, Bhagwan Singh Yadav, who presented written evidence substantiating the long-standing scam .
Official Response and Future Implications
Joint Registrar of Gwalior, Bhupendra Singh, confirmed the ongoing investigation: "On the government's instructions, we began an investigation three months ago. A 12-member inspector-level team is working on it. We've sought complete records from FCI, Markfed, and the Food Supply Corporation. Once received, responsibility will be fixed and legal action taken" .
Complainant Bhagwan Singh Yadav highlighted the scam's broader reach: "This scam is not limited to Gwalior. Similar irregularities exist in Shivpuri and Dhar districts too. Gunny bags have not been returned in several other societies as well" .
The case has reignited concerns about systemic corruption within Madhya Pradesh's cooperative network, a sector fundamentally designed to support farmers and underprivileged communities. As investigators work against time to reconstruct seven years of manipulated records, the bardana scam represents another critical test for the state government's commitment to cleaning up institutional corruption that ultimately deprives the most vulnerable of essential resources .
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