CAG report on land mortgage instill fear among industry bodies

After the Comptroller Auditor and General of India (CAG) chastised the state's land acquisition agency, Odisha Industrial Infrastructure Corporation (Idco) for issuing 'No Objection Certificates' (NOC) to industries to mortgage the leased land unauthorisedly, the industry bodies in the state fear Idco may stop issuing such NOCs in future though it has recently been vested with the authority to do so.

"If out of CAG scare, Idco stops issuing NOCs to small and medium enterprises then it will impact the process of industrialization in the state. We request Idco that it should continue its task of issuing NOCs as it is now vested with the power to issue the certificate after the cabinet approval", said Sarat Sahu, Chairman, Odisha Industries Federation at a joint press conference of all industries associations of the state.

The observations of CAG in its report for 2011-12, which was laid in the assembly last week, have been corrected now and the matter may be treated as closed. Idco should be given a chance to issue the NOCs, he added.

On the auditing agency's observation that basing on the NOCs issued by Idco, 12 companies availed loans worth Rs 52,423.50 crore by mortgaging 8,489.89 acre land allotted to them, Amit Behera, Convener, North Odisha Chamber of Commerce & Industry (Nocci) said that the bank loans are approved on the basis of techno-feasibility report of the project, not on the basis of land only.

"The industrial units are languishing as Idco has stopped issuing NOCs for last two years. We feel, there will be indefinite delay in setting up of these units if Idco stops issuing NOCs now", he said and accused CAG of sensationalizing the issue, which related to certain routine findings in the functioning of the government, by emphasising on the matter during a press conference.

The CAG report on mortgage of leased land by project promoters to raise finance has snowballed into a major controversy with the opposition parties demanding a probe by Central Bureau of Investigation (CBI).

The industries bodies also sent an open letter to CAG. In the letter they have stated that if there was any oversight or technical glitch standing in the way of allowing Idco the permission to grant the right to mortgage in the eyes of CAG, it has been removed by departmental notifications and a cabinet approval.

"Idco irregularly issued NOCs to 26 MoU based industries for mortgaging 13,846.23 acre land in order to raise loans from financial institutions. Based in the NOCs issued by Idco, 12 companies availed loans worth Rs 52,423.50 crore by mortgaging 8,489.89 acre land allotted to them. Data from the financial institutions showed that out of the sanctioned loan amount, Rs 8,625.89 crore has been released so far," CAG report read.