Ministers bent rules for Sri City: CAG

Hyderabad: AP and Telangana have 78 SEZs out of 301 in the country. “We noted in the case of 31 developers and 10 units in nine states including in AP that extensions were given as a matter of routine despite nil or meagre investments in these projects.” the Comptroller and Auditor General of India report said.

It was noted that 10 out of 36 operational developers in Andhra Pradesh have not obtained Environmental Clearances.

AP SEZs have projected exports of Rs 1.84 lakh crore but there is a shortfall of 93.81 per cent where only Rs 11451 crore export targets have been achieved.

Likewise, in earning foreign exchange, it was projected that AP SEZs would achieve Rs 413.66 crore but there is a shortfall of 79 per cent. Regarding employment, CAG found that 16.78 lakh jobs were supposed to be generated but only 1.13 lakh jobs were generated and there was a huge shortfall of 93.22 per cent.

CAG mentioned that Sricity SEZ in Chittoor district of Andhra Pradesh had declared in its application that the land acquired and allotted by the Corporation would be utilized for developing multi product SEZ. “In Sri City SEZ, 2070.12 ha of land of the total allotted land was not used for the intended purpose. It was also noted that the denotified land was allotted to private DTA industries viz., Alstom, Pepsico, Cadbury, MMD, Unicharm, Colgate, ZTT, IFMR, Kellogg’s, S&J Turney Contractors, Tecpro, Sripower, RMC/WMM, Danjeli, Ayurvet, TII, Godavari Udyog, Thaikikuwa. However, the price at which the land was allotted to DTA units was not produced for audit,” said CAG.

“It was further observed that the Empowered Group of Ministers in their meeting emphasized the need for restricting the use of Land Acquisition Act for acquiring land for private SEZs and issued guidelines that the Land Acquisition Act would no longer be used for making land transfers to private SEZs. Guidelines were issued based on this. However, in respect of Sricity SEZ, land was acquired by APIIC in phases invoking the Land Acquisition Act and handed over from May 2007 to December 2011, in contravention of the instructions issued by EGoM .”

“In Andhra Pradesh, Brandix Apparel of Textiles SEZ at Atchutapuram mandal, Visakhapatnam district, over an area of 404.70 hectares, in the event of failure of SPV/users to generate the agreed employment within the stipulated period, it shall pay lease rentals equivalent to the then prevailing lease rentals in the vicinity of the land . As of March 2013, only eight units had started their operations providing employment to 11737 people (19.6 per cent). Further, GoAP had not fixed and communicated the ‘Commitment Fulfillment Date’ for the developer, in the absence of which action could not be initiated to surrender the land or to quantify the obligation on the part of the developer in discharging the lease rental obligation arising from the breach of agreement.”

The CAG said Andhra Pradesh had allotted 80.93 hectare land to Hyderabad Gems SEZ with the condition to generate employment for 15000 people within five years of allotment of land which was relaxed to 10000 people. However, as of March 2013, the total employment generated was only 3835, which is 38.35 per cent of the commitment.

AP SEZs also have huge shortfall of exports amounting to 93.81 per cent as projected.

Review of six SEZs in Andhra Pradesh, Odisha and Uttar Pradesh indicated that they could not be notified even after a lapse of seven years.

Deccan Infrastructure and Land Holdings Ltd., a subsidiary of AP Housing Board, was accorded 14 Formal Approvals to set up SEZs in different areas of the state on over 640.964 hectares in 2008. Even then the Developer could not fulfill the conditions stipulated for notification viz., legal possession, irrevocable land rights, contiguity of land, etc. in any of the approvals.

No action was taken either to review the case or cancel the approval.