In your interest.
Online Personal Finance Magazine
No beating about the bush.
Maharashtra has decided to offer lands to the lessees at about 20% to 30% of the market value. Some lessors are even allowed to continue at the old rates. That too when the state government could earn Rs25,000 crore annually just from the lease rents
Seeking correct price determination while giving the government lands on lease and asking the Maharashtra government to stop the “75% discount sale”, Shailesh Gandhi, former Central Information Commissioner, has sent notices to the authorities.
In the notices sent to the state revenue secretary, collector of Mumbai and collector for Mumbai Suburban, he said, “I had raised this issue in 2005 and I have been given a large file showing how my letter titled “Arbitrariness and huge loss of Public money in Public lands given on Lease” led to an eight year confabulation. At the end of this, it appears that the revenue department has come up with a bizarre policy to give away public lands to lessees at 20% to 30% of the Ready Reckoner values. It pains me that the revenue department appears to have done no calculations of revenue potentials and has arbitrarily decided to put up the lands on a 75% discounted sale, limited to the buyer being an existing lessee.”
The former CIC learnt, through Right to Information (RTI), that the land was given away by the Maharashtra government at throwaway prices instead of market prices. The Maharashtra government had leased out land at 20%-30% discounts rather than market rates. This will have ramifications on how the State intends to services its people in the future.
Mr Gandhi estimates that the government’s decision to mindlessly give away land will lead to an annual loss of about Rs5,600 crore, collectively from each of the three departments mentioned above. The basis of the legal notice was on the incrimination information found in the RTI. Read RTI exposes a revenue loss of Rs25,000 crore in Maharashtra
Mr Gandhi stated, in his legal notice, “The revenue department has informed me that a bizarre policy has been evolved to give away public lands to lessees at 20% to 30% of the Ready Reckoner values. This is arbitrary, since it decides to give largesse only to people who were given leases earlier, and has no rational basis.”
Basically, 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, according to Mr Gandhi.
Given that real estate values are higher today than many years back, the Maharashtra government ought to lease land at prevailing market rates. Instead, it is being disposed off at a discount. Moreover, the leased land is being given away only for a one-time fee and not on a recurring basis (i.e. lease revenue). This means, the state is devoid of steady and regular income that it needs so badly to service its gargantuan debt of over Rs2.5 lakh crore! Instead, the taxpayers are being made to pay for it.
He stated in an earlier piece, “This is a revenue stream (i.e. lease revenue) which is partial hedge against inflation, saving future generations from having to pay ever higher taxes.” It is estimated that Rs25,000 crore could be generated if lease revenue model is adopted instead of one-time fee.
In the legal notice, Mr Gandhi cited precedents from previous court cases where it was ruled that state governments not only must act rationally but also in a fair and transparent manner. One such precedent, quoted from Sachidanand Pandey Vs State of West Bengal (1987) 2 SCC 295, stated, “State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders.”
Another precedent, Mr Gandhi quotes the Supreme Court Judgement in the case of Kasturi Lal Krishna Reddy Vs State Jammu & Kashmir (1980), was quoted: “Every action taken by the government must be in public interest; the government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch-stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid”
Through the notices, Mr Gandhi expects the revenue secretary, Suburban Collector and the Mumbai Collector, to justify their action and method for disposing off lands at cheap rates. “You are a Public servant representing the poorest man in Vidarbha who may be starving, and is an equal and rightful owner of this land. It is necessary that the appropriate revenue is obtained for him, and his land and interest are safeguarded,” he said in the notices.