CAG questions low SEZ plot rates

Injudiciously reducing premium for the plots in the special economic zone of Indore, announced by the Centre in 2000, is "affecting the viability of the project," according to a Comptroller and Auditor General report.

The Audyogik Kendra Vikas Nigam, Indore, which has been appointed as the implementing agency, has played the developer's role in allotting plots to 15 companies like SRF Ltd, Industrial Unving Packaging, Flexituff, Emerald Tobacco (P) Ltd, Mahgauri Foods Ltd, SOCERS Pharmaceuticals (P) Ltd., Ecolife Pharmaceuticals (P) Ltd., Asian Marine Service, IPCA Lab, Nicholas Piramal, Eicher Motors, IITC Organic India (P) Ltd, and a commercial plot to Bhaskar Exim Ltd during February 2003 and January 2004.

The state government has set the rates of premium for the plots of more than 5 acres in the SEZ at Rs 825 per square metre and Rs 1,030 per sq metre for plots of less than 5 acres in respect of industrial plots, and Rs 4,950 per sq metre in respect of commercial plots.

The management of the AKVN Indore, however, proposed (February 2003) reduction in the premium of commercial and industrial plots and sought the board's approval, without furnishing justification.

The CAG report says, "Though the board was not authorised to reduce the rates fixed by the state government, it approved (February 2003) reduction in premium from Rs 1,030 to Rs 400/Rs 500 per sq metre for plot areas less than five acres and from Rs 825 crore to Rs 400 per sq metre for areas above five acres in respect of industrial plots and from Rs 4,950 per sq metre to Rs 600/Rs 800 per sq metre in respect of commercial plots."

"The irregular reduction of premium resulted in a loss of revenue that worked out to Rs 21.71 crore and Rs 87 lakh, respectively.

The report contested the management statement that the Board of Directors was empowered to decide on the rates of land in the capacity of developer and the Board approved reduction in rates.

"The state government had appointed AKVN Indore only as implementing agency and not as developer. The state government had not approved the reduction of premium and there was no justification for reduction of rates of premium, which was Board's competence.

The CAG has also observed that AKVN Indore has not made a long-term plan for the acquisition/development of land.