Gujarat govt denies CAG charges on land allotment to corporates

Says CAG did subjective audit instead of objective audit

Responding to the objections raised by the Comptroller and Auditor General of India (CAG) regarding land allotment to corporate houses, the Gujarat government rubbished the charges saying the top auditor did ‘Subjective audit instead of an objective audit’ of state finances.

Denying the CAG’s allegations on land allotment to corporate houses, the state government’s spokesperson minsters, Nitin Patel and Saurabh Patel stated that land allotment to the industries was transparent and in line with the applicable policy.

“From the report submitted by the CAG, it appears that it did a subjective audit instead of an objective audit of the state finances,” the ministers stated in a statement issued on Wednesday.

The government in its statement clarified that joint venture of corporate houses – L&T, Mitsubishi and Nuclear Power Corporation of India were given land at Hazira for their Critical Steam Generator and Nuclear Forging plant.

“The allegation that 30% concession was given by the Government amounting to Rs 128 crores, is wrong.  This project is an engineering project involving high-tech technology and critical for the country’s nuclear power generation programme. It was a conscious decision taken by the State Government to provide 30% concession in the cost of the land to this prestigious engineering unit of the country serving the nuclear power sector,” the statement said.

“The government is empowered to take a decision to encourage such innovative projects,” it said.

Further, giving its clarification on the CAG’s observation of loss of Rs. 2.03 crores to the state government from the land allotment to Reliance Petroleum at Jamnagar for housing colony for their industrial labourers, the government stated that “it is a question of interpretation by State Government and CAG.”

“The Government considers that costing of land for housing colonies for labourers should not be equated with the industrial purpose which are given at an enhanced rate.”

Commenting on the CAG’s observations of the high-profile GIFT city project the spokesperson ministers today stated that there were no discrepancies in the project and the project is aimed at unlocking the value of uncultivable land.

“GIFT City is a public private partnership project between GUDC and IL & FS. The developer has been given the rights to develop the land and the right of ownership is still with the government,” the state government communiqué noted.

In addition to this, the revenues generated from the project will be distributed between the government and the developer on 50-50% basis for the first phase, while after the completion the entire project, the revenue sharing will be 80:20 with larger part going to government.

In its annual audit report, the CAG had pointed that the land valued at Rs 2,700 crore was allotted by the state cabinet for a nominal price of rupee one.

"In this case (GIFT project), the state government authorised the allottee to mortgage/lease the land without seeking permission from the collector/government. The state government, despite repeated requests, did not produce to audit the joint venture agreement signed between government/GUDC and IL&FS," the CAG had observed.

The government stated that it decided pragmatically and consciously, to transfer 662 acres of government land to the joint venture company at Re 1 for the development of the project, in relaxation of the standing policy of the state government,” the statement said.

The Gujarat government also noted that in the long term, the Government is going to recover total cost of the land through surplus amount in the form of net profit which will accrue based on the realistic estimation and evaluation of the project. “Therefore, the question of the so-called loss of Rs 2,760 crore, worked out on certain assumptions, does not hold good,” it said.