Would you believe that Maharashtra loses over Rs25,000 crore annually because of carelessness or corruption, and this has not been exposed so far?
Are we really poor or are we thrust into poverty? The recent scams, which have been unearthed, give me a feeling that we may actually be quite well off with enough resources. If the lakhs of crores of public resources being given away and snatched away by the few were to come to the public exchequer, we could be quite comfortable as a nation. I have been pursuing one such scam in Maharashtra in which I believe a few thousand crores of public money is being lost to benefit a few.
Maharashtra’ debt is about Rs2.7 lakh crore, and we pay the interest for this. A state owns many resources on behalf of its citizens. One of these is land. Governments sell some of the lands and give some on lease. The idea behind giving certain lands on lease is to basically have an inflation-proof investment and sometimes, to encourage certain activities. Hence it offers lands on lease. It wishes to retain the land so that it may basically ensure that its revenue matches with the growth in inflation.
A lease is legal transaction, which primarily lays down the area that is leased, purpose for which the land is to be used, period of lease, lease rent and certain other conditions. When the lease expires, it may be renewed with the lessor increasing the lease rent as per the market price, which reflect the inflation in the intervening period.
When any individual or institution gives land or a property on lease and the lease expires, a fresh lease is drawn up at the prevailing market rates if the lessee wants to continue. This simple principle has not been followed in Mumbai and possibly in the state of Maharashtra. I have been told that this is true all over the country. Some leases are renewed while some are allowed to continue occupying the land at the old rates. What are the reasons for such irrational actions?
This may be due to carelessness or corruption.
I had discovered this in 2005 and drawn the attention of the chief secretary to this in a letter titled “Arbitrariness and huge loss of public money in public lands given on lease”. I have now got the scanned copy of the file relating to this which has over 600 pages over the years and has ended on a bizarre note.
The Supreme Court is the 2G case has said, “In conclusion, we hold that the state is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good.” The poorest man who may be starving is an equal and rightful owner of this land, and it is necessary that the appropriate revenue is obtained for him. I looked at the list of leases of lands given by the two collectors of Mumbai (obtained in RTI) and decided to calculate the worth of the lands where lease deeds have expired and unauthorized occupiers are allowed to continue.
Let me first share the route the Maharashtra Government has decided to adopt after eight years of confabulations: The government has decided to offer the lands to the lessees at about 20 to 30% of the value! I am shocked at this irrational action of the government and think it is about time, citizens defend their revenue by telling the government they will not accept this approach. Below are the detailed calculations...
Note on some assumptions in calculations:
I used the Ready Reckoner rates, which are for FSI of 1 (one). I checked with some renowned architects and builders and was told that the land value for the island city is reckoned at a FSI of 3 to 5 and for the suburbs at a FSI of 2 to 4, I therefore assumed land value at FSI 3 for the city and 2 for the suburbs. In the case of the suburban collector, when I could not get the value of the land from the Reckoner I took two leases which had been given. In 2007, for an access road Rs1,062 per sq mtr had been charged; I therefore assumed a rate of Rs1,200 per sq mtr in 2013 for access roads, playgrounds, etc.
For other uses, I assumed a rate of Rs5,200 per sq mtr since a lease had been given in Malad for a CNG outlet in 2009 at Rs5,348 per sq mtr. In the case of Mumbai collector, since usage has not been provided, I have assumed that the total rent would be less by 15% to take into account the open grounds/ playgrounds, etc.
My feeling is that the total figure, which I have arrived at is most probably an underestimate. I have assumed that the market would be willing to bid at least 7% of the market value of the lands. In this case the fixed lease rent would be payable for a period of about 30 years. Future escalations would be to the lessee’s advantage.
On this issue I quote from the Supreme Court judgement in Matter No.C.A.No.5559/2001 JH Wadia v/s. Board of Trustees, Port of Mumbai, where it said, “The period between 1.4.1994 and 31.3.2000 is the bone of contention. The compromise proposals proposed 15% return for non-residential use and 12% return for residential use as the fair market rent on the estate value. The division bench of the High Court has directed these rates to be reduced to 6% and 4% respectively. Instead of our undertaking an exercise afresh as to what would be a fair and reasonable return to the Bombay Port Trust, it is sufficient to record that all the learned counsel for the parties excepting the Bombay Port Trust, have agreed that the lessees are prepared to accept the rates revised as 10% and 8% respectively.”
Based on this I feel a rate of 7% today is very conservative.
In the case of the information about leases provided by the Mumbai collector, in 103 cases there is no mention of the lease date and period of lease. Despite a specific query by me using RTI, the PIO has said they will need two to three months to provide this information!
There are also other government agencies like BrihanMumbai Municipal Corporation (BMC), which have similar lands in Mumbai. My calculation (see box above) estimates that there is an annual loss of about Rs1,550 crore by Mumbai Collector and about Rs1,200 crore due to the suburban collector (see below), i.e. a total revenue loss of Rs2,750 crore every year.
The government now proposes to give away ownership rights to the lessees for Rs2,248 crore plus Rs1,841 crore onetime! Citizens must protest before the government dispossess us of our land and legitimate revenue.
If we can get the government to auction the leases in Mumbai and all over Maharashtra we could have a revenue stream of over Rs25,000 crore each year. Citizens and media need to make the government get the appropriate revenue by fixing lease amounts at current rates. Also this is a revenue stream which is partial hedge against inflation, saving future generations from having to pay ever higher taxes.
(Shailesh Gandhi served as Central Information Commissioner under the RTI Act, 2005, during 18 September 2008 to 6 July 2012. He is a graduate in Civil Engineering from IIT-Bombay. Before becoming a full time RTI activist in 2003, he sold his packaging business, Clear Plastics. In 2008, he was conferred the Nani Palkhivala Memorial Award for civil liberties.)
“We are totally shocked at the behaviour of HSBC in its commercial dealings with a customer, who once happened to be its own employee,” the New Delhi District Consumer Disputes Redressal Forum said wile giving the order
A Delhi-based consumer forum has imposed a fine of Rs5.5 lakh on banking major Hongkong and Shanghai Banking Corporation (HSBC) for unfair trade practice of keeping its customer’s already settled loan account outstanding and charging interest from him.
The New Delhi District Consumer Disputes Redressal Forum pulled up the bank saying that HSBC’s act was not only “motivated by commercial gains”, but also by a “malicious mind” to “settle scores” with the complainant, who was a former employee, for challenging his termination in a labour court.
“In our considered view, opposite party (HSBC) has not only been motivated for its commercial gains, but also by a malafide malicious mind to settle scores of litigation in labour court over his challenge of termination,” a bench presided by CK Chaturvedi said.
“We are totally shocked at the behaviour of HSBC in its commercial dealings with a customer, who once happened to be its own employee. Such attempts in unfair trade practices should be dealt with iron hands...
“We hold it guilty of atrociously and maliciously deficient in services to complainant and tormenting the complainant for reasons foreign to commercial dealings,” Chaturvedi said.
The forum directed the bank to refund the amount it had charged from Delhi resident Naduthodi Janardanan as interest by keeping his loan account open from 2001 to 2008 and also ordered HSBC to pay him Rs5.5 lakh as compensation and cost of litigation for the harassment caused to him.
In his complaint, Janardanan had alleged that HSBC kept his loan account outstanding despite having settled it after leaving the bank's employment.
Janardanan had also alleged that he was being targeted in this manner as he had challenged his termination in a labour court.
HSBC in its defence had refuted the allegations and contended that the complainant had not settled his loan and had instructed them to deduct payment towards it from his accounts with the bank.
The forum rejected the contention saying the bank acted “contrary to the instructions” of Janardanan.
The uproar over the IRS scandal last week reinforces the point that much of the heat is just the latest expression of Washington cynicism and its consequences -- that the talk show hosts and their fellow travellers, and the representatives and senators and officials in the executive branch, aren't really looking for answers here. They're just putting on a show
ProPublica’s job is to report the news rather than to make news ourselves, but sometimes we find an article of ours to be itself a subject of public debate. Last week was such a time, when two articles we had published back in December and January became the subject of significant attention in light of the uproar over Internal Revenue Service (IRS) oversight of the process for granting tax exemption to so-called “social welfare” groups under section 501(c)(4). We triggered that attention, with a third article we published on May 13, setting out everything we knew about the circumstances of our previous stories.
Largely ignored in a public outcry last week—radio rants, Twitter storms, congressional, presidential and prosecutorial posturing-- were the following:
Our pieces in December and January raised very serious questions about whether six different “dark money” political groups seeking tax exemption had made false statements on their applications. Those applications are signed under penalty of perjury . If any false statements were made knowingly, the groups— including Karl Rove’s Crossroads GPS —may have committed a crime. There is no indication, however, that either the IRS or the Department of Justice has done anything since January to investigate whether such crimes were indeed committed. The groups in question happen all to be conservative. Not one congressional Republican has, to my knowledge, expressed any concern about this possible criminality.
Even more remarkably, leading public figures have asserted as fact that they know how we came to receive nine documents in the mail—statements that appear to have little basis (and in some cases, no basis at all).
The former acting Commissioner of Internal Revenue said on May 17 that the agency’s inspector general had found that the disclosure to us was “inadvertent”—we had requested the applications, but they should not have been sent to us before they were approved. The IRS followed later the same day with a statement to the same effect—but then refused to answer questions about who had made the mistake, and why they should be believed when they denied having acted intentionally (and thus likely denied committing a crime).
What really seems to have happened at the IRS in Cincinnati, across the last three presidencies (a Democrat, then a Republican, then a Democrat), and across two turns of the partisan screw in the House of Representatives, from Republicans to Democrats to Republicans again, is that the agency has been starved of resources, and badly mismanaged.
But while it took the IRS four long days to tell people about their conclusion of “inadvertence” and the same four days for ProPublica to report out the dysfunction , people like Rush Limbaugh, and their followers and fellow travelers on Twitter and in the fringe press, rushed headlong to judgment. Here’s what Limbaugh said about the mid-level federal employees at the IRS in Cincinnati on Tuesday: “The people at these government agencies have been stocked with leftists for decades now, and they’re all activists.” What evidence did he offer for this? None. How could he know that someone in a large bureaucracy, shuffling thousands of pieces of paper, didn’t make a mistake? He couldn’t, and he didn’t.
Well, you might say, that’s Limbaugh. But it wasn’t just Limbaugh. Stephen Moore writes for the Wall Street Journal (where I worked for 15 years, and where Mr. Rove also writes). Yet, he called the documents we were sent “ illegally leaked .” He knew nothing more than Limbaugh. “What is the motivation,” Moore asked, “for leaking these documents? The answer is that the left is trying to dry up the money of tea party and conservative groups by intimidating donors.” He noted that another group, in another case, had its donor list released. But in our case, there were no donor lists, and we had redacted the limited financial information on the forms we published. Moreover, these applications are completed with the expectation that they’ll eventually be made public—because they are when they are approved. Never mind all that; presumably no need to mention it.
And what of the investigators? Congressional committees leapt into action. The inspector general for the IRS had apparently already investigated. The President demanded another investigation; the Department of Justice said it had commenced a criminal inquiry.
Knowing that such is the way in Washington, we waited at ProPublica for someone to send us a subpoena, show up on our doorstep, or maybe just call. Nothing. Nothing since December 13, when we told the IRS we had these documents they weren’t supposed to have sent us—or since the next day, when we published that fact. Nothing before the inspector general reached his conclusion, nothing before the congressional hearings started televising their demands for answers and their righteous indignation, nothing since.
In point of fact, the investigators would have found out that we have nothing of value to them. But the fact that they didn’t even ask tells you a lot. And it reinforces the point that much of the heat generated last week on this subject is just the latest expression of Washington cynicism and its consequences—that the talk show hosts and their fellow travellers, and the representatives and senators and officials in the executive branch, aren’t really looking for answers here. They are just putting on a show.