State tweaked rules to grant land to Ford and L&T, says report

The Comptroller and Auditor-General of India has come down heavily on the Gujarat government and State public sector undertakings for causing a loss of nearly Rs. 580 crore to the exchequer by bestowing “undue” favours on large corporate entities.

Major industrial houses to which the Narendra Modi government played benefactor included Reliance Industries Ltd (RIL), Essar Steel and Adani Power Ltd (APL), said the CAG report for the year ended March 31, 2012.

The report, tabled in the Assembly on Tuesday, said the government tweaked rules to grant land to automaker Ford India and engineering and construction major Larsen and Toubro, resulting in the loss of revenue.

Deviation of terms

“Gujarat State Petronet Ltd [GSPL] was responsible for deviating from the agreed terms of recovery of gas transportation charges from the specified entry point of the company’s pipeline network and this led to passing of an undue benefit of Rs. 52.27 crore to RIL.”

The CAG said GSPL had failed to safeguard its own interest and passed on the undue benefit to RIL.

It noted that Gujarat Urja Vikas Nigam Ltd (GUVNL) did not adhere to the terms of the Power Purchase Agreement, which led to a short recovery of penalty of Rs. 160.26 crore and passing of undue benefit to APL.

Reacting to the report, the Opposition Congress alleged a “collusion” between the State dispensation and corporate houses.

“We have been raising the issue of collusion on every forum. The corporate houses get undue favours and in turn they praise the Modi government,” Congress spokesman Manish Doshi said.

Not a scam: government

The government, however, downplayed the issue, saying what the auditor had noted was “not a scam but [were] just irregularities.”

“This is not a scam but in the language of the CAG it is called irregularities. The report will go to the Public Accounts Committee and later the State government will take a call on it,” Finance Minister Nitin Patel said.

The CAG also indicted the Gujarat government for regularising 7,24,897 square metres of land “encroached” upon by Essar Steel Company Ltd (ESCL) at Hazira in Surat district at an “unjustifiable” price, resulting in a short recovery of the ad hoc occupancy price to the extent of Rs. 238.50 crore.

Government land measuring 7,24,897 square metres was encroached upon by ESCL in Hazira. On the request of the company, the government decided in July 2009 to regularise the encroachment by a levy at 2.5 times the ad hoc value of land at Rs. 700 per square metre, on the grounds that the land in a nearby area was given to L&T, the report said.

“We noticed that Rs. 700 per square metre was not justifiable,” the auditor said.

The State granted land to Ford India and Larsen and Toubro at concessional rates “playing around the rules.”

L&T was allotted government land for manufacture of supercritical steam generators and for a forging shop for a nuclear power plant. The price of land was fixed by the District Level Valuation Committee instead of the State Level Valuation Committee which resulted in the exchequer forgoing revenue of Rs 128.71 crore.

The CAG said the Modi government had allotted around 460 acres valued at Rs. 205 crore to Ford India Private Limited without price fixation by the State Level Valuation Committee. The report, however, did not mention the quantum of loss to the exchequer on this account.

It would be desirable if the government followed a uniform policy for allotment of government land to safeguard its revenue and public interest at large, the CAG said. — PTI


  • Major beneficiaries are Reliance Industries, Essar Steel and Adani Power: CAG

  • Congress sees collusion between State dispensation and corporate houses