The Comptroller and Auditor General of India (CAG) has indicted State PSU Odisha Industrial Infrastructure Development Corporation (IDCO) for several systemic deficiencies in acquisition and allotment of land for industrial purposes leading to irregularities, favour and loss of revenue worth crores of rupees.
The CAG audit report has noted that on the basis of NOCs (No Objection Certificates) issued by the IDCO, loans of as much as Rs 52,423 crore was sanctioned by financial institutions in case of 12 promoters of MoU-based industries for mortgage of 8,489 acres of allotted land.
In its report on General and Social Sector for March 2012, the CAG said that to meet the objective of rapid industrialisation and orderly establishment of industries, IDCO establishes industrial estates at different strategic locations and provides infrastructure therein.
Further, the IDCO is also a nodal agency of the Government for providing land to large projects which cannot come up in the industrial estates.
However, the CAG in its performance audit of acquisition and allotment of land for industrial projects proposed by IDCO for the period 2001-12 revealed several systemic deficiencies and violations such as incorrect application of public purpose clause, emergency provision for acquisition of land and assessment of compensation etc.
Instances were also noticed where land was acquired on locations indentified by the promoters of the industries without considering the impact on agriculture, irrigation and environment.
The report was tabled in the Assembly by the Finance Minister Pradip Kumar Amat on the last day of the discussion on the general discussion on the Budget for 2014-15 fiscal. Interestingly, though the CAG had given its report on January 20 last, the report was not placed in the short session of Assembly in February last for obvious reasons.
“Audit noticed that in 190 land Acquisition (lA) (MoU based industries) cases checked, the Revenue and Disaster Management Department approved acquisition of 14,296 acres of private land for 33 industries (non-Government Companies) at Rs 912 crore during 2002-12 under ‘public purpose’ clause, even though the circumstances did not permit the land to be acquired under public purpose,” said the CAG in the report.
The CAG also rejected the contention of RDM department, which stated (April 2013) that IDCO was acquiring private land for industrial purpose, which is very much a public purpose under section 31(1) of OIIDC Act 1980.
“The reply is not acceptable since IDCO was acquiring land for private promoters and the entire cost of acquisition was borne by the promoters concerned. Thus, land for these industries should have been acquired under Part VII of lA Act but was acquired under ‘public purpose’ to bypass the legal provisions and procedures prescribed under part VII of lA Act and lA (Companies) Rule, 1963,” said the report.
During 2002-12, the State Government acquired 29,769 acres private land and provided them to 52 MoU based industries (20,795 acres) and 54 non-MoU industries (8,973 acre). It also said that provisions of the lA Act were violated resulting in bypassing the safeguards available in the lA Act, 1894 and lA (Companies) Rule, 1963 to protect the interests of land owners.
The audit noticed that in respect of 92 out of 225 checked lA cases (190 for MoU and 35 for non-MoU) relating to 20 companies, 7,025 acres of private land were acquired at Rs 205 crore during 1995-2008 by invoking emergency provision though none of the above grounds was fulfilled.
Further examination of these lA cases by the audit revealed that in all 92 cases, the IDCO recommended application of emergency provisions by citing a generic reason that the projects would be executed on priority basis.
Surprisingly, in 36 lA cases involving acquisition of 2,845 acres for 10 projects, emergency provision was approved by the Under Secretary even though such power was only vested with officers of Deputy Secretary and above rank.
“Thus, emergency provision was arbitrarily applied, contrary to the provisions of lA Act and the land owners were deprived of the rights to contest the land acquisition and protect their property due to inappropriate application of emergency provision,” read the report.
It also said No Objection Certificates (NOC) were irregularly issued to several industries to raise thousands of crores of rupees in the form of loan from financial institutions by mortgaging the land allotted to them.
“As per information collected from these financial institutions, five out of the 12 industries have been released loan of Rs 8,625 crore. In case of remaining 14 industries, quantum of actual loan sanctioned/ availed on mortgage of land was not made available by IDCO to the audit,” said the report.
However, in seven out of these 14 industries to whom NOC was given by the IDCO, the audit noticed that the land was mortgaged with the financial institutions along with other fixed assets to avail a total loan of Rs 28,214 crore.
In 32 industrial estates, the IDCO also irregularly issued NOC to 736 small and medium industrial units allowing mortgaging land allotted to them during 2001-12.
“Thus, IDCO unauthorisedly issued such NOCs, thereby enabling industries to raise loans on the basis of land allotted for industrial purpose, without adequate safeguards to ensure that such capital would actually be used in the industrial projects concerned,” said Auditor General Amar Patnaik.