CAG faults denotification practice

The Comptroller and Auditor General (CAG) of India has indicted successive governments in Karnataka since 1999 for recklessly denotifying land identified and acquired for IT parks and special economic zones.

The denotification practice has caused loss of hundreds of crores of rupees to the State exchequer.
In its report titled “Performance Audit of Acquisition and Allotment of Land by KIADB” 2010-11 tabled in the Legislative Assembly on Friday, the CAG has found a series of serious lapses in almost all steps involved in the development of industrial areas, especially land acquisition and payment of compensation to the land losers.

The CAG has detected glaring irregularities and discrepancies in the functioning of Karnataka Industrial Area Development Board (KIADB).

During the “test-check” of denotification, the CAG came across cases wherein the notified lands were denotified following a petition to the then chief ministers or industries ministers. The denotification cases took place during the regimes of four chief ministers — S M Krishna, N Dharam Singh, H D Kumaraswamy and B S Yeddyurappa. However, the report only mentions the governments and does not name any of the chief ministers.

The proposed industrial areas that were affected due to denotification include software development facility of Infosys off Sarjapur road, Aerospace SEZ near BIA, Electronic City Industrial Area, IV phase, Sompura Industrial Area, Stage I, Hardware Technology Parks in Bangalore north taluk, and Agro Tech Park in Belgaum. Altogether, 563.16 acres of notified lands were denotified between November 2005 and April 2011, according to the report.

For instance, the KIADB in 2001 issued preliminary notification to acquire 126 acres in Bellandur for setting up a  software development facility of the IT major Infosys Technologies Ltd.

But the Board was finally able to acquire only 76 acres, as the government denotified the remaining land between February and May 2004.

The company rejected the fragmentated land. The Board subsequently urged the government to withdraw the denotification to enable development of a proper industrial area. The government responded by denotifying another 59 acres. “Thus, a series of denotifications by government before and after taking possession of land defeated the very purpose for which notification for acquisition of land had been issued,” the CAG stated.

Similarly, about 18 acres of 869 acres notified for proposed hardware park in Huvinayakanahalli on the outskirts of Bangalore were denotified to favour two persons based on request made to the then chief minister in 2005. Another parcel of about 20 acres of land was denotified illegally in Bangalore north taluk in 2008, following a request made to the then chief minister.

This apart, the CAG has observed that establishment of industrial areas were not consistent with the industrial policies of the government and lack of diligence on its part has to led to regional imbalances.