Kolkata: Following the recent controversies over the Union government’s allotment of airwaves and coal blocks, the West Bengal government has decided that it will give away state-owned land for industrial use only through auctions.
Though a constitution bench of the Supreme Court ruled late last month that auction was not the only way to determine suitable recipients for scarce natural resources, modifying a previous judgement of the same court, the West Bengal government insists on auction for allotment of all state-owned assets.
“It is time-consuming, but auction is the most transparent way (to allot land and other assets),” said Partha Chatterjee, the state’s commerce and industries minister.
However, the state didn’t find many takers at recent auctions of land in industrial parks. For some projects such as the financial hub in Rajarhat town, which is loosely modelled on Mumbai’s Bandra-Kurla Complex, the state government has had to advertise and extend deadlines for submitting applications several times. Yet, it received a tepid response.
It is the same story at three other industrial parks—Vidyasagar Industrial Park at Kharagpur in West Midnapore district, Panagarh Industrial Park in Burdwan district and Rishi Bankim Park at Naihati in North 24 Parganas district. The three put together, the state is unable to lease out 2,000 acres of ready-to-use land. These industrial parks are partly occupied and so it should have been easier to get new entrants.
The state government has had to extend the deadline for submission of applications by a month, said a commerce and industries department official, who did not want to be named. Yet there seem to be no takers.
“An auction works when there’s demand,” said a Kolkata-based industrialist, who, too, asked not to be named. “Question of price discovery through auction does not arise if there is no demand.”
The West Bengal government has in the past had to persuade several industrial units to set up shop in remote industrial parks, according to the state government official cited above.
“People are normally sceptical about infrastructure in industrial parks,” he said. “Investors start taking interest only after the state administration is able to demonstrate that some units have moved in and have commenced production.”
A complex pre-tender process that has been introduced could also be a deterrent, he said. The state has decided that a group of officers of the West Bengal Industrial Development Corp. Ltd (WBIDC) will review all applications, following which minister Chatterjee will personally meet the shortlisted applicants. Only those selected through this screening process will be allowed to make financial bids.
“At a time when the West Bengal government is struggling to revive investors’ interest in the state, it has risibly introduced such difficult conditions for allotment of land,” said the industrialist cited above.
There could be some demand for small plots of 5-25 acres at the three industrial parks, said the state government official, but due to the conditions set for the auction of land, there are very few takers.
The state’s inability to find takers for land is taking a toll on WBIDC, which borrowed at least Rs.200 crore to set up the industrial parks, the state government official added.
WBIDC is paying at least Rs.33 crore in annual interest on loans taken to build these industrial parks—it had expected to repay these loans from the lease premium received from the industrial units.