The report of Comptroller and Auditor General of India criticised the West Bengal government for Rs 81 crore loss, incurred due to concession for the Tata Motors Project at Singur by the West Benfal Industrial Development Corporation Ltd. The news, carried in Business Standard, is pasted below.
The report also noted that land-losers were paid compensation for about Rs 100 crores too.
Here goes the BS Report
Singur land cost Bengal Rs 81cr, says CAG
BS Reporter / Kolkata March 29, 2008 (http://business-standard.com/common/news_article.php?tab=r&autono=318285&subLeft=1&leftnm=3)
The West Bengal Industrial Development Corporation Ltd (WBIDC), has incurred a loss of Rs 81.52 crore on the account of the Tata Motors small car unit at Singur in Hooghly district, according to the Comptroller and Audit General of India (CAG).
"WBIDC incurred excess expenditure of Rs 2.99 crore, towards payment of avoidable interest of Rs 1.44 crore and delayed consent awards of Rs 1.55 crore. Further, it subsidised Tata Motors Ltd by Rs 76.11 crore on leasing of 645.67 acres of land at Singur for ninety years," CAG's annual report said.
Top sources in the government said the state had worked out a special package to get the Tata Motors Rs 1 lakh car project to the state in view of its importance, and had to match the incentives offered by the hill states.
CAG on its part said the total estimated cost for land acquisition was Rs 135.25 crore but the corporation had drawn loan of Rs 200 crore, on ad hoc basis at an interest rate of 10 percent per annum repayable by March 2010.
Against this the corporation spent Rs 143.10 crore on land acquisition, land development rehabilitation and related expenses excluding the interest payment.
It also invested Rs 55.56 crore in fixed deposits at 7.3 percent per annum, while the balance Rs 1.34 crore remained unspent.
"Thus injudicious drawl of loan led to additional interest burden of Rs 1.44 crore between September 2006 and July 2007, due to differential interest rate between the borrowing rate and rate of returns on deposits," the report said.
Besides, WBIDC leased 645.67 acres to Tata Motors at Rs 96.72 crore for 90 years against annual lease rent of Rs 1 crore from first to fifth years and rising over the years to reach Rs 20 crore from sixth to the 90th years.
This implied that the present value of cumulative lease rent of Rs 855 crore payable by Tata Motors over 90 years was around Rs 18.62 crore a year at a discounting factor of 10 percent per annum.
CAG pointed out that according to the directives of the government for long term leases for 99 years, the lessee should pay 95 percent of the market value of the land as one time premium on commencement of the lease and pay annual rent at 0.3 percent interest of the market value of the land.
Accordingly, for 645.67 acres, Tata Motors should have paid a premium of Rs 91.88 crore and lease rent of Rs 29 lakh annually.
Hence, the present value of the aggregate premium and cumulative annual lease rent was around Rs 94.73 crore at the same discount factor.
This indicated total loss of Rs 76.11 crore to WBIDC over the entire lease period.
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