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Public land for private interest

 MPost |  2014-11-25 22:45:47.0  |  New Delhi

83,000 crore rupees, if for nothing else means a lot of money. At a time when the country is reeling under a tremendous pressure to clean its fiscal deficit record, a revenue loss of that extent and that too because of land allotted for the purpose of setting up Special Economic Zones being lying waste for six years, is not only going to hurt the new government hard but it may also force it to take some crucial decisions on land allotment, the money involved and the purpose for which the same has been allotted.


The Comptroller and Auditor General (CAG) should be applauded for the resolve with which it has brought out the following piece of information. Why should the previous Congress led UPA government not be cornered for the alleged levels of complicity in matters related to land acquisition for SEZs will not only raise many eyebrows but will cast aspersions on the present government’s heightened push to amend the archaic Land Acquisition Act of 1894. With the onus being on privatisation, taxpayers can only stand guarded about their hard earned money. 

But for the moment, the Congress led UPA government should not be let off the hook that easily. If one looks into the CAG performance audit report, one will realise how ineligible tax deductions were extended to companies, which in complete defiance of morality, diverted the land allotted further to other uses. What is even more interesting is the fact that the 83,000 crore loss to the exchequer does not include the loss accrued on account of central excise and service tax. Had it been a part of the same, the loss could have been humongous.

With approvals dating back to 2006, what becomes perplexing is the fact that more than 50 per cent of the allotted land remained idle and still the previous government did not consider it worthy enough to initiate a probe, let alone press for procedural action against the wilful defaulters. In 2007, when a similar study was conducted by the parliamentary standing committee on commerce, the estimated duties foregone accumulated to over Rs 1.75 lakh crore rupees across the country in form of tax holidays extended to SEZs between 2004 to 2010. It is but understood that SEZs are given land at peanut rates so that large scale employment can be provided.

The other interests are of course investment, exports and economic growth. What can be touted as the beginning of  a wrong precedent, it is shocking that in some cases that up to 100 per cent of the allotted land was diverted, sold or leased, to make profit or used for interests not even vaguely related to either investment and export.  

The murkiness of the entire business can also be gauged from the fact that when the SEZ Act was brought into effect, a whopping 17 out of the then 28 states were kept out of the implementation board. The Act which rendered the single window system as ineffective was also the beginning of a trend that left developers and unit holders unmonitored in absence of an internal audit set-up. It may have posed a huge risk for revenue administration, but clearly those in power seemed disinterested.

With increasing focus towards turning State owned enterprises (SOEs), it becomes more than imperative for the Central government to take up measures to hold an eventuality like this in the near future. Privatisation as per the Modi government may be the best thing happening to India but if such cases of large scale corruption and an ineffective administration will continue to tumble, the days of public trust and mass appeal of the prime minister may be numbered on this one too.    

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