CAG finds fault with land allotment-Karnataka
There has been a loss of Rs 104.40 crore to the government by The Karnataka Industrial Areas Development Board (KIADB), the Karnataka government undertaking that acquires land and allots to industries, due to allotting developed industrial plots at subsidized rates to three companies in 2012- 13.
The KIADB allotted fully developed plots at Narasapura Industrial Area (NIA) at subsidised rate as against the government’s approval for allotment of undeveloped plots to three companies such as Mahindra Aerospace Private Limited (MAPL), Honda Motorcycles and Scooter India Private Limited (HMSI) and Cerebra Integrated Technologies Limited, According to a report of the Comptroller and Auditor General of India (CAG), which was tabled in the state legislature on Wednesday.
There is an approval by KIADB for formation of the NIA in August 2010 and fixed tentative price (FTP) at Rs 85 lakh per acre to allottees. In addition to the FTP, Rs 6.70 lakh per acre was payable by allottee towards tertiary treated water (TTW).
The government accorded in November 2010, principle approval for establishing aerospace components, structures and assembly unit proposed by MAPL and allotted 12 acres of undeveloped land at subsidized rate of Rs 42.65 lakh plus TTW of Rs 6.70 lakh per acre. The board allotted 12 acres to MAPL initially and later allotted 20 acres of developed land after the company requested for additional eight acres in lieu of original allotment.
The government concurred to the allotment of 96 acres to HMSI for establishing their third factory and 12 acres to Cerebra for establishing E-waste recycling plant as proposed by the board at the subsidized rate of Rs 40.62 lakh per acre similar to allotment made in respect of Mahindra in September 2011 and November 2011 respectively.
The KIADB allotted an additional land of 23.05 acres to HMSI (September 2012) at the same subsidized rate in contravention of its earlier resolution. Inspite of the fact that the board while approving the allotment of 96 acres to HMSI resolved (November 2011) mentioned that any additional land to HMSI would be allotted at regular rate of Rs 85 lakh per acre. Thus, HMSI was allotted 119.05 acres in all of developed land at subsidized rate.
CAG said in its report. “We observed that the total development cost for establishing NIA was Rs 462.09 crore with allotable area of 418.29 acres. Thus, the cost per acre of allotable area works out to Rs 1.10 crore. Though, government in their letters approved the board’s proposal of allotment of undeveloped land at subsidized rate, the board allotted developed plots at subsidized rate to these three firms which resulted in loss of Rs 104.40 crore.”
The board has resolved for revision of the tentative allotment rate to Rs 138.50 lakh per acre for allotments made at NIA excluding bulk allotment made at subsidized rates to three companies since they are anchor industries in the field of automobiles, which attracts vendor industries. There would be no loss to the Board in view of revision of tentative allotment rates to other allottees, as stated by the government afterwards.
However the government’s argument has not been accepted by CAG “As per the prevailing rules, there is no provision to fix or approve any cross subsidized rate in allotment of land and to adjust under recovery of cost from one set of industries against cost on vendor industries. The government had approved allotment of undeveloped lands, but the board allotted developed lands to these companies,” as mentioned in CAG’s report. The anchor industry is defined as an “industry with capital investment of Rs 500 crore or more in the first phase and having a minimum of 15 vendor units in the same industrial area.
The Mahindra project cannot be categorized as anchor industry as their capital investment was Rs 284 crore only as per the above definition, the CAG pointed out.
Source: Business Standard.
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