Modi’s Pals

CAG report indicts the Gujarat government for showering undue favours to corporate groups leading to massive losses
Himanshu Upadhaya Bengaluru

While Narendra Modi’s apologists will selectively quote from the latest CAG audit report on state finances that revenue earning has registered an upswing, they will compulsively forget that “the fiscal deficit of Rs 11,027 crore in 2011-12 was met out from a net borrowing of Rs 15,083 crore”. The CAG has remarked that “an increase of 41 per cent in the market borrowing in 2011-12 over previous year for financing the deficit would lead to increased interest burden for coming years”.

Reporting its findings from the Performance Review of Management of Government Land, CAG has severely indicted the Gujarat government for extending favours to corporate groups such as Larsen and Toubro (L&T), Adani, Reliance Industries Limited (RIL) and Essar. The auditors asked for the files relating to 1,262 cases of allotment and regularization of encroachment approved by the government during 2006-07 to 2010-11. However, they were given access to only 594 case files.

According to CAG report for the year ended March 31, 2012, Gujarat State Petronet Limited (GSPL) was responsible for deviation from the agreed terms of recovery of transportation charges for transportation of gas from the specified entry point of the company’s pipeline network; this led to passing of undue benefit of Rs 52.27 crore to RIL.

In April, 2012, CAG auditors sought the reasons for non-production; there was deliberate evasion. The audit mentions that a file on a company called ‘GIFT’ was not produced.CAG has highlighted breach of allotment conditions by the Mundra Port and SEZ Ltd stating that only 98.66 lakh sq m out of 5.47 crore sq m were used by the company till December 2011, while land was allotted from 2005 to 2007. CAG reminded the land revenue department that the collector is empowered to either levy penalty or take back the possession of the land. There was no response. Is this because a corporate entity is too close to Modi?

The performance audit highlights the allotment of 8,53,247 sq m land at Hazira to L&T  for setting up facilities for manufacture of Super Critical Steam Generators and Forging Shop for a Nuclear Power Plant. While the District Land Valuation Committee (DLVC) had recommended the rate as Rs 1,000/1,050 per sq m, the State Land Valuation Committee (SLVC) had recommended Rs 2,020 per sq m in September 2007.

The cabinet in February 2008 granted a special concession of 30 per cent on the value of land fixed by DLVC and allotted the land at Rs 700/735 per sq m. L&T applied for 12.14 lakh sq m for expansion of the project in August 2009 even as DLVC fixed the rate for land at Rs 2,800/2,500/2,400 per sq m. As per the laid down process, the revenue department should have gone for SLVC fixing the rate, but in consultation with principal secretary, finance department and chief secretary, it proposed to apply the same concessional rate of Rs 700 per sq m and the cabinet allotted 5,79,577 sq m of land.

Not only did this resulted in the loss of revenue worth Rs 128.71 crore to state exchequer, this also set in a ripple effect where corporates that have been sitting on encroached government land in the vicinity at Hazira came forward to get the occupancy regularized at ‘concessional’ rates. By applying similar rates to Essar Steel, the department inflicted a loss of Rs 238.50 crore and extended undue benefit to Essar.

CAG’s audit points out how K Raheja Corporation Pvt Ltd was allotted grazing land for the construction of an IT park in Gandhinagar district and was allotted 3,67,581 sq m of land at the rate of Rs 470 per sq m, which resulted in short recovery of Rs 9.96 crore. CAG has argued that it should been levied Rs 705 per sq m in this case.

While they allotted 30,54,915 sq m of land to Essar Power Gujarat Ltd in the vicinity of a highway in Jamnagar for a power project, they levied Rs 80 per sq m instead of Rs 107 per sq m. The department accepted the mistake in a correspondence in June 2012; it added 30 per cent for highway approach, but sought to gave the corporate group a concession by allowing a 30 per cent deduction by stating that the land was of smaller area!

The audit report on Public Sector Undertakings (PSUs) states, “A review of last three years’ audit reports of the CAG shows that in the state, PSUs’ losses of Rs 4,052.37 crore and infructuous investment of Rs 166.77 crore were controllable with better management. There is a need for greater professionalism and accountability in the functioning of PSUs… The above losses pointed out are based on test checked audits of PSUs, and the actual controllable losses could be even higher.”

From the print issue of Hardnews :

APRIL 2013