Punjab govt faces heat on Reliance's retail plan

The Punjab government's offer of incentives for Reliance Industries Ltd's network of rural retailing centres has led to protests by political parties and the state mandi board.

Though State Finance Minister Surinder Singla says the concessions are part of the policy to attract agri-investment and are not company specific, political opposition to the move has been mounting, especially as the state mandi board is an autonomous organisation and says there is no provision to sell land to a private party at concessional rates. It can be sold only through open auction.

Colleagues of the chief minister, sensitive to the fact that Punjab faces an assembly election in 2007, are saying that the land ought to be auctioned, but on no account should RIL be allowed to take the project elsewhere.

Punjab Minister for PWD and Culture and Archives PS Bajwa said a few days ago that the state had suffered because of the Tata's decision to shift its small car project to West Bengal only because the government was unable to negotiate the sales tax on cars.

West Bengal, on its part, reduced the sales tax, which brought down the price of each car by Rs 5,600. "If Punjab loses the Reliance project, it would miss the opportunity to bring investment to the state. In the project, Reliance was offering to increase the income of Punjab farmers from Rs 25,000 to about Rs 1.5 lakh per acre" Bajwa said.

State Congress chief SS Dullo says RIL must invest in Punjab but wants that the land be allotted through a public auction. If this makes the project costlier, so be it.

The way the state government has pitched the RIL deal is to tell farmers that instead of selling gobi at Rs 1.50 per kg, they will have a chance to sell it at Rs 5 per kg. RIL will sell the same gobi in Mumbai at Rs 50 per kg. In return, the farmer will get fertiliser, seeds and agro-consultancy.

"We are determined to see the project through. We are convinced that this is what Punjab needs for the second Green Revolution and we will make it an election issue," said Singla.

The government has decided to allow the setting up of private mandis by issuing the necessary notification.

Fiscal incentives to be offered to RIL include complete exemption on purchase tax, mandi tax, rural development fund and cess etc; exemption of purchase tax on milk procurement; and 50 per cent exemption on electricity duty. The concessions to RIL have been proposed for 30 years.