CAG Report Reveals INR 12.86 Crore Loss in WBIDCL Land Allotment to Flipkart
A CAG audit has detected a loss of INR 12.86 crore to West Bengal Industrial Development Corporation (WBIDC) on account of allotment of land to Flipkart’s logistics subsidiary, Instakart Services, at Haringhata Industrial Park. Audit discovered that WBIDC miscalculated land price.
West Bengal Industrial Development Corporation Limited (WBIDCL) lost INR 12.86 crore, according to the Comptroller and Auditor General (CAG). This setback happened during the distribution of land at the Haringhata Industrial Park in the Nadia district to Instakart Services, the logistics division of e-commerce giant Flipkart.
The above finding is included in the 2024 report on public sector undertakings for the period ending March 31, 2023, published by the CAG. The BJP government of West Bengal presented the report to the assembly on July 24. According to the report, the previous Trinamool Congress (TMC) administration did not submit CAG reports for the four fiscal years ending in 2024-25.
The Land Deal by TMC
The auditor found that WBIDCL lost money because it went against the corporation's pricing strategy by calculating the land's base price without taking into account the presence of substantial bodies of water on the project site. The report stated that in August 2017, the government of West Bengal, headed by Mamata Banerjee, transferred 1,326.93 acres of land to the Industrial Development Corporation for industrial use. Phased development of an industrial park in Haringhata was decided upon by the corporation a month later. The cost of acquiring 358.19 acres of land was covered by the state government, which sanctioned INR 206.73 crore.
The Land and Land Reforms, Refugee Relief and Rehabilitation, and Land and Land Reforms departments received the funds in March 2018. In addition, the land was seized by the corporation in October 2018. The Haringhata Industrial Park was advertised by WBIDCL to potential investors in August 2018. The land was leased out by WBIDCL for 99 years on an "as-is-where-is" basis for INR 63.49 lakh per acre. In September 2018, Instakart Services sought 107.35 acres to build a regional distribution centre, with an investment proposal of INR 991 crore.
The proposal was authorised by WBIDCL's board in October 2018, and the allotment was cleared in December 2018 by the state Cabinet's Standing Committee on Industry. In January 2019, for INR 68.16 crore, the land was granted to Instakart by the corporation. Possession was handed over in April 2019. In March 2020, an additional 1.77 acres were allocated for INR 1.07 crore, and ownership was transferred in June 2020. In February 2021, a 99-year lease deed was executed for 109.12 acres.
What Went Wrong in the Deal?
The CAG discovered 55.89 acres of water bodies in the Haringhata Industrial Park's layout plan during its examination of the deal in December 2022. It would be impossible to construct industries around these water bodies. So, according to the report, WBIDCL used the entire 358.19 acres to determine the per-acre land price, although the actual allocable property at the park was only 302.299 acres.
The auditor brought attention to the fact that according to WBIDCL's own pricing policy, the allocable land area alone should be used to determine the base price, not including the 10% administrative charge and the cost of land acquisition. Based on that methodology, the CAG revised the base price to INR 75.23 lakh per acre, which is higher than the actual charge of INR 63.49 lakh per acre. Accordingly, Instakart should have paid INR 82.09 crore as a lease premium for the 109.12 acres. The report stated that WBIDCL was short INR 12.86 crore due to the fact that it only collected INR 69.23 crore.
