CAG flags Rs 12.86 cr loss in WBIDC's land deal with Flipkart in West Bengal

 

The West Bengal Industrial Development Corporation Limited suffered a loss of Rs 12.86 crore while allotting land to e-commerce major Flipkart's logistics arm Instakart Services at its Haringhata Industrial Park in Nadia district, a CAG report has flagged.

The report noted that WBIDCL, the state's nodal agency for industry development, incurred the loss because it computed the base price of the land without accounting for large water bodies within the project site, in deviation from its own pricing policy.

The finding is part of the Comptroller and Auditor General's (CAG's) 2024 report on Public Sector Undertakings for the period ending March 31, 2023, which was tabled in the Assembly by the BJP government on Friday, July 24.

The erstwhile TMC government had not tabled CAG reports for four fiscals up to 2024-25.

The Haringhata campus, which houses Flipkart's largest fulfilment centre in the country, is central to the company's investment in West Bengal. The facility, with 50 lakh cubic feet of storage across six mezzanine levels, was inaugurated in 2022.

According to the CAG report, the state government in August 2017 decided to transfer 1,326.93 acres of land to WBIDCL for industrial purposes. A month later, the agency decided to set up an Industrial Park there in phases.

The state government granted WBIDCL Rs 206.73 crore as the total cost for the procurement of 358.19 acres there. The amount was paid to the Land and Land Reforms and Refugee Relief and Rehabilitation Department in March 2018, and WBIDCL took possession of the land in October that year.

In August of that year, the agency floated an expression of interest for investors at the Haringhata Industrial Park, fixing the land price at Rs 63.49 lakh per acre for a 99-year lease, on an as-is-where-is basis.

Instakart sought 107.35 acres in September 2018 to set up a regional distribution centre, proposing an investment of Rs 991 crore.

The WBIDCL board approved the allotment in October, and the state Cabinet's Standing Committee on Industry cleared it in December 2018.

The corporation allotted the land to Instakart in January 2019 for Rs 68.16 crore, handing over possession in April 2019. An additional 1.77 acres was allotted in March 2020 for Rs 1.07 crore, handed over in June 2020.

A 99-year lease deed for 109.12 acres was executed in February 2021.

Scrutinising the deal in December 2022, CAG found the Haringhata Industrial Park's layout plan included 55.89 acres of water body that could not be used for industrial development.

This meant the actual allocable land at the park was only 302.299 acres, not the full 358.19 acres on which WBIDCL had calculated its per-acre price.

As per the Corporation's own pricing policy, the base price should be arrived at by dividing the acquisition cost plus 10 per cent administrative charge by the allocable land only, the CAG report highlighted.

Recalculated this way, the base price works out to Rs 75.23 lakh per acre, against the Rs 63.49 lakh per acre actually charged.

On this basis, the lease premium payable by Instakart for 109.12 acres should have been Rs 82.09 crore while WBIDCL collected only Rs 69.23 crore, leaving a shortfall of Rs 12.86 crore, the report flagged.

The state government in May 2023 said the agency's board had approved the Rs 63.49 lakh per acre base price in July 2018 after detailed discussion and the Cabinet had also cleared the allotment on this basis.

The CAG, however, did not accept this, noting the reply did not explain the reasons for not following WBIDCL's own pricing policy, and reiterated that 55.89 acres were water bodies and cannot be allotted for industrial development.

Flagging the matter, the auditor cited the West Bengal Inland Fisheries (Amendment) Act, 1993, which bars filling up water areas for construction without prior state approval, and a November 2019 Supreme Court order on schemes that extinguish local water bodies.

It concluded that computation of the base price without considering the actual allocable area for development had resulted in the Rs 12.86 crore loss to the state's nodal agency for industrial development.