The state government has defended the right of its nodal agency for land acquisition — Odisha Industrial Infrastructure Corporation (Idco) to allow mortgage of land by industries for availing bank credit.
The land mortgage issue had snowballed into a major controversy with the office of the Comptroller & Auditor General of India (CAG) raising objections over allowing mortgaging of leased land by Idco. The central auditor had pointed out that Idco is not empowered to do so as it requires government approval.
Without mortgaging the leased land, the industrial promoters found it tough to raise funds to implement their projects. “Idco has the inherent power to mortgage the land and with that in view and in order to achieve the legislative intention of creating industrial infrastructure, the corporation has been giving no-objection certificate (NOC) for mortgaging the land to the industrialists. It is to be mentioned here that by granting NOC for mortgage, the land does not become a freehold land. This concept of granting mortgage for securing loan is a standard practice followed all over the country,” Nirupama Mallick, joint secretary (industries) said in a letter to the Accountant General-Odisha.
Contesting the audit’s observation that Idco has no powers to issued NOC for land mortgage to industries for securing loans, the state government said, no industry can be created without support from financial institutions and it is a universal phenomenon.
“Whenever a financial institution sanctions any loan keeping a land mortgage, the basis of loan is not the land alone. The feasibility of the project is studied meticulously by the bank and in addition to land, other components like plants and machinery, human capital, other resources, credibility and past experience are also taken into consideration. It cannot be said that land is the only criteria basing on which loans are sanctioned,” the letter stated.
If for every matter, the government intervenes in the functioning of Idco, then industrial facilitation and growth will only be a dream which will never come true and Idco will get buried in the debris of so many directions, the letter further said.
Meanwhile, a proposal for tripartite agreement involving the department of revenue & disaster management, Idco and the beneficiary company is under consideration to facilitate the process.
The land mortgage issue was referred to the law department which in turn has suggested a tripartite pact. The pact will be similar to the model adopted by the Maharashtra government.
