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Mainstream, VOL XLIX, No 20, May 7, 2011

West Bengal: Land, Money and the Marxists in New Town

Saturday 14 May 2011

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by Sanjeeb Mukherjee

Most governments in India are regularly in the news for the wrong reasons. Corruption, murder, rape and mayhem have become routine pastimes of Ministers and their men. It has to be recognised that the Left Government in West Bengal has a much brighter image; no major scam has embarrassed it. Though charges have been levelled against some Ministers and rumours are afloat, the media and the Opposition as well as whistleblowers and intellectuals have failed to properly scrutinise this government. No muck seems to stick; it led a journalist to describe the former Chief Minister as Teflon coated. Long stints in power have universally corrupted governments, so it has been a long-standing puzzle to explain the relatively clean image of the Left Ministers of Bengal. The Left’s claims to honesty and integrity are, according to it, the result of its Marxist ideology and commit-ment to the people. This clean image was buttressed by the trust the people reposed in this ideology and government.

However, in its present innings under Buddhadeb Bhattacharjee the Left has been publicly accused of many a wrongdoing, from land-grabs to rape and murder. The charges are increasingly getting weightier and sounding far more credible. Recently, the Trinamul Congress paraded with a pile of files containing charges of land-grab and corruption in the showpiece product of this government—the New Town project. After all, Rajarhat did not become a Singur or a Nandigram. It was touted as a grand success story of willing and happy peasants parting with their land for an urban and industrial future of Bengal and they in turn were adequately compensated and rehabilitated. Who is telling the truth? Mamata Banerjee or Gautam Deb?

Corruption and Cronyism in Bengal

SCHOLARS have often described the distinctiveness of events and processes in this region as the result of a phenomenon called Bengali excep-tionalism. Does it hold true for explaining the absence of scams and scamsters smearing the image of the Left? Or is the exceptionalism thesis merely an excuse for not being able to explain the specificities of Bengal? We need to seriously examine the Banerjee-Deb spat on Rajarhat-New Town. Fortunately, the Comptroller and Auditor General of India is a much respected independent constitutional body, which has unearthed many a scam, including the mind-blowing amount swindled by the former Telecom Minister, A. Raja. Before examining Raja the CAG audited Rajarhat, first in 2007 and then in 2009, and both these reports are available in the public domain. Bengali civil society seemed to have been fallen for the Teflon coated image of the Left. Their trust blinded them.

To meet the demands of urbanisation the Bengal Government in the early 1990s planned to set up what it called a New Town Project in Rajarhat to cater to a population of 7.50 lakhs for all income groups with emphasis on housing for the economically weaker sections and lower income groups as well as developing a new business centre. Later it set up the West Bengal Housing Infrastructure Development Corporation (Hidco) in 1999 under the chairmanship of Housing Minister, Gautam Deb, to do the job. It covered an area of 3087 hectares at an revised estimated cost of Rs 7429.57 crores. The initial estimate was Rs 2000 crores. According to the Performance Review Report of the CAG in 2007, Hidco was entrusted with making an Outline Development Plan and a Detailed Development Plan within two to three years, but had failed to submit any plan. Nor does it have any comprehensive strategic plan. (p. 21) The CAG remarks that it did not have an annual plan of work either and as a result land acquisition was done in an ‘ad hoc manner’. (p. 23) Without any guide-line it was easy to convert it into the fiefdom of the Minister and his cohorts. My examination of the report would be confined to four major themes: land acquisition and rehabilitation of affected people; financial irregularities resulting in public financial loss; the claims of cross-subsidy in favour of the poor and allotment of plots and flats.

Land Acquisition and Rehabilitation

THE Left Government has all along claimed that there are two problems with land acquisition by private persons, first, they would tend to cheat small landowners of their legitimate dues, and secondly, large tracts of contiguous land is difficult to acquire. Hence it is in the best interest of small farmers to deal with the government directly. The performance review of Hidco in 2007 by the CAG shows that 708.65 hectares of land was purchased from small landowners below the market price resulting in the loss of Rs 50.34 crores on the part of poor peasants. (p. 24f) On the other hand, in three mouzas 712.94 hectares was acquired at rates higher than prevailing prices by three per cent to 174 per cent. The CAG made a strong remark that ‘rates were fixed arbitrarily bypassing the provisions of the Land Acquisition Act’. (p. 25) Imagine a Left Government violating the law to deprive poor peasants of their due and in other cases favouring some.

Deb boasts of the rehabilitation and resettle-ment of the project-affected people as exemplary in New Town, as a result there were no Singur or Nandigram type of protest movements. But the CAG makes a horrifying revelation. It says that 83 per cent of the erstwhile landowners were not identified and financial assistance was not extended to them as per the official policy on rehabilitation. (p. 27) In other words, an over-whelming majority of land losers were simply swindled and evicted by a Marxist government. Recently Deb in a TV interview said that Mamata Banerjee’s protests against the Tatas in Singur should have been forcibly stopped by the State. Was his success story in Rajarhat due to such strong-arm tactics? The CAG thus concluded: ‘Land was acquired either below prevailing rates or above market rates without any detailed justification…. Moreover, the rehabilitation and resettlement programme was dragged along without concern for the land losers’. (p. 43)

Financial Irregularities

IN the commercial audit report of 2009 by the CAG a detailed account is given of a large number of financial transactions cases in only two areas, which were audited, namely, land development and sale of land. And the total loss comes to about Rs 788 crores This is about 11 per cent of the estimated project cost and if all other areas were to have been audited what figures would we have got? For example, the CAG had reviewed the bulk allotment of 508.79 acres of land to 55 firms and found that Hidco sustained a revenue loss of Rs 371.75 crores.(p. 33) Bengal Unitech got under-priced land and gained Rs 49.61crores. (p. 33f) The other companies who were favoured by violating the ‘land pricing policy…but also the tenets of financial propriety’ were DLF Limited and Magus Bengal Pvt Ltd. Likewise, Bengal Ambuja was offered land at Rs 3.6 lakh per cottah, where Hidco had itself earlier realised Rs 7.66 lakhs in the same area. (p. 35) Tata Consultancy Services was also allotted land in violation of financial propriety leading to a loss of Rs 124.87 crores. (p. 36) Contrary to the policy of Hidco itself land was sold to 8573 allottees much below the stipulated price, which resulted in a loss of Rs 179.47crores. (p. 41) Why were some favoured who were not by any stretch of imagination persons belonging to weaker sections or low-income groups?

Cross-subsidy to Favour Lower Income Groups

ACCORDING to Hidco’s land pricing policy, lower price was to be charged for weaker/lower income groups, break-even price for middle-income groups, and higher market price for higher income groups. The CAG report shows that Hidco fixed the selling price at 150 to 200 per cent of break-even cost for HIG and 68 to 125 per cent of break-even cost for LIG and MIG for plots allotted up to December 2003. The Report says: ‘Thus, HIG group was extended more relief by Rs 41.48 crores than the LIG and MIG group, thereby frustrating the objective of cross- subsidisation policy.’ (p. 41) So much for Gautam Deb’s much bandied subsidised housing for the poor by charging the rich higher prices!

Allotments and Special Quotas

THE emphatic purpose of setting up New Town was to cater to the housing needs of the economically weaker sections and the low income group. The executive summary of the audit report of 2009 states: ‘The Company deviated from its own allotment policy.’ (p. 23) There were two types of allotment, one, open allotment through lotteries, and two, through two categories of quotas under the Minister. Arbitrary allotments and deviation from Hidco’s own policies were found in both. Audit of the lottery conducted in 2005 revealed that there were variations in the number of applications received as recorded in the Accounts Section and that documented by the Administrative Section of Hidco. No reasons were recorded for such discrepancies. As many as 256 applications were not considered in the lottery though they had deposited the requisite application money, whereas 215 persons who had not applied with application money were allowed to participate in the lottery. (p. 42)

There is evidence of gross wrongdoing in the allotment under two special quotas belonging to the Chairman of Hidco, who needless to say is the Housing Minister Gautam Deb. Under the Chairman’s quota it received 3630 applications till March 31, 2009 and allotted 292 plots. Out of these, the CAG scrutinised the records of 172 allottees and found that six allottees did not even submit their applications; while 90 did not mention the category under which they were eligible. Further, 167 out of 172 allottees did not submit the requisite supporting documents under which they claimed to get allotment under the Chairman’s discretionary quota. On the other hand, 95 applicants were not considered though they had submitted their applications along with requisite documents. Most important no reasons were recorded for such anomalies in allotment. (p. 43) Thus what appears in simple terms is that the Chairman arbitrarily allotted plots from his quota as if the land was his private property and he was distributing gifts to people he loved or favoured.

The second type of the Chairman’s arbitrary distribution was called Special Quota and 300 plots were made available. The CAG strongly observed that neither did Hidco frame any guidelines and procedures for allotment nor did it issue any public notice for distribution of plots as is mandatory for any public property. The beneficiaries included 72 government officers and again no reason or supporting documents existed for such distribution. More shocking was the fact of two Directors of Hidco recommending their own names for allotment under the Special Quota ‘indicating lack of transparency and objectivity in the allotment process.’ (p. 44) Thirtyseven allottees out of 135, whose records were scrutinised by the CAG, did not even make a formal application for allotment under the Special Quota. Not only were they given preferential treatment, they were even charged less for the land leading to a loss of revenue of Rs 2.28 crores. (p. 45)

Recently several newspapers reported that the Minister’s wife and his SUV driver were allotted plots from these special quotas when the Minister’s wife already has a house in Kolkata. A Special Quota is only meant for those who do not have any house in the city. Then how could his wife be a beneficiary? Moreover, the minimum standard of fairness demands that a committee entrusted with distributing largesse cannot benefit from its own decisions. It was also reported that one Hidco Director, who was allotted a plot, soon transferred it and made a hefty profit. This brings us to the final charge, which is not merely the actual losses calculated by the CAG but the presumptive loss entailed by Hidco based on the market value of these plots and the preferential prices offered to the favoured few. A loss, I believe, would be staggering and would find our Minister in the company of the former Telecom Minister.

Case for a Commission of Inquiry

THE CAG confined its audit to two areas: development of land and sale/allotment of land. Our reading of the report shows that New Town was projected over 3087 hectares at a revised estimated cost of Rs 7429.57 crores. Till March 2009, 1224.89 hectares was ready and in 935.55 hectares work was under progress and if we presume that 50 per cent of it is complete then about 55 per cent of land development should be in order. Accordingly, 55 per cent of the project cost or Rs 4086.26 crores has been spent. The total amount of wastages, in terms of avoidable cost, inadmissible payments, lost revenue opportunity may be estimated as Rs 988.23 crores as the CAG report shows. This amounts to 24 per cent of the estimated project cost. It calls for a complete scrutiny of all aspects of the New Town project.

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