CAG Flags Rs.12.86 Crore Loss in WBIDC's Land Deal With Flipkart
According to a CAG report, the West Bengal Industrial Development Corporation Limited incurred a loss of Rs 12.86 crore when allocating land to Flipkart's logistics subsidiary, Instakart Services, at its Haringhata Industrial Park located in Nadia district.
The report highlighted that WBIDCL, the state's main agency for industrial growth, suffered the loss as it calculated the base price of the land without considering significant water bodies present in the project area, contrary to its own pricing guidelines.
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The discovery is included in the Comptroller and Auditor General's (CAG's) 2024 report concerning Public Sector Undertakings for the period concluding on March 31, 2023, which was presented in the Assembly by the BJP government.
The previous TMC administration had failed to present CAG reports for four financial years up to 2024-25. The Haringhata campus, containing Flipkart's biggest fulfilment centre in the nation, is crucial to the firm's investment in West Bengal. The establishment, featuring 50 lakh cubic feet of storage over six mezzanine levels, was opened in 2022.
As per the CAG report, the state government resolved in August 2017 to hand over 1,326.93 acres of land to WBIDCL for industrial use. A month later, the organization opted to establish an Industrial Park there gradually. The state government allocated Rs 206.73 crore to WBIDCL for acquiring 358.19 acres in that area. The payment was made to the Land and Land Reforms and Refugee Relief and Rehabilitation Department in March 2018, and WBIDCL acquired the land in October of that same year.
In August of that year, the agency issued an expression of interest for investors at the Haringhata Industrial Park, setting the land price at Rs 63.49 lakh per acre for a 99-year lease, on an as-is-where-is basis.
In September 2018, Instakart aimed to acquire 107.35 acres to establish a regional distribution center, planning to invest Rs 991 crore. The allotment was approved by the WBIDCL board in October and received clearance from the state Cabinet's Standing Committee on Industry in December 2018.
In January 2019, the corporation allocated the land to Instakart for Rs 68.16 crore, transferring possession in April 2019. In March 2020, an extra 1.77 acres was allocated for Rs 1.07 crore, transferred in June 2020. In February 2021, a lease deed for 109.12 acres was signed for 99 years.
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Examining the agreement in December 2022, CAG discovered that the layout plan for Haringhata Industrial Park comprised 55.89 acres of water body unsuitable for industrial development. This indicated that the park's true allocable land was merely 302.299 acres, rather than the entire 358.19 acres on which WBIDCL based its per-acre price.
According to the Corporation's pricing policy, the base price must be determined by dividing the acquisition cost plus a 10 percent administrative fee by the lands that are allocable, as emphasized in the CAG report. When recalculated, the base price totals Rs 75.23 lakh per acre, compared to the Rs 63.49 lakh per acre that was actually charged.
According to this, the lease premium that Instakart owes for 109.12 acres was supposed to be Rs 82.09 crore, but WBIDCL only received Rs 69.23 crore, resulting in a shortfall of Rs 12.86 crore, the report noted. In May 2023, the state government stated that after thorough discussions, the agency's board had approved a base price of Rs 63.49 lakh per acre in July 2018, and the Cabinet had also endorsed the allotment based on this price.
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The CAG, however, rejected this, pointing out that the response failed to clarify why WBIDCL's own pricing policy wasn't followed, and emphasized that 55.89 acres constituted water bodies and cannot be allocated for industrial development.
Highlighting the issue, the auditor referenced the West Bengal Inland Fisheries (Amendment) Act, 1993, which prohibits filling water bodies for construction without state approval, along with a November 2019 Supreme Court ruling regarding projects that eliminate local water bodies. It determined that calculating the base price without accounting for the real allocable area for development led to a Rs 12.86 crore loss for the state's primary agency for industrial development.