Home/ Politics / News/  Tatas to retain management of steel city as SC rules status quo

New Delhi: Steel city Jamshedpur will continue to be managed by the Tata group, with the Supreme Court granting a status quo on Wednesday and stalling efforts by the government of Jharkhand, where the city is located, to set up a municipal corporation to govern the city and its environs.

The Tata group does not want to give up control of the city because it has “been spending money for infrastructure" development in Jamshedpur, according to Sanjay Choudhry, a spokesperson for Tata Steel. Choudhry did not disclose the quantum of this investment.

The Jharkhand government wants to set up a municipal corporation for Mango, Jugsalai, Jamshedpur and Adityapur because only areas with municipal corporations are eligible for grants under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a Union government initiative that has a corpus of Rs50,000 crore and which seeks to improve the quality of infrastructure in urban areas.

A senior official at the Jharkhand administration who did not wish to be identified said that in order to be eligible for funds under JNNURM, the state needs to consolidate Jamshedpur and its surrounding areas into one urban agglomeration. It cannot leave out the city because that would make the area to be governed by the municipal corporation non-contiguous, something that isn’t allowed.

The state government and Tata Steel Ltd, which owns the lease for a 64 sq. km portion of land in Jamshedpur and provides utility services to the city though a subsidiary, have been jockeying for control of the city for some time. In September 2006, an order passed by the Jharkhand high court allowed the governor, who is normally bound by the advice of the state government, the freedom to decide the status of Jamshedpur. The Tata group challenged this in the apex court.

After coming to know about the state government’s decision to form a municipal corporation for the city, the group asked the court to hear its case at the earliest. The court heard the case on Wednesday—a day before the state government was to sign an agreement with the Union urban development ministry to bring the city, to be administered by the proposed municipal corporation, under the purview of JNNURM.

The scheme provides grants of as much as 90% of project cost for urban development work in cities, provided, the states agree to set in place a series of mandatory reforms, including setting up of elected local bodies such as municipal corporations. Jharkhand is currently not eligible since it has not undertaken to set the reforms process in motion.

An analyst said the state government could, if it wishes, go ahead and sign an agreement with the urban development ministry to bring state capital Ranchi under JNNURM. “I think it (the decision of the state government to create a municipal corporation for Jamshedpur) is as much political as anything else," said the analyst who works for a credit ratings firm and did not wish to be identified.

“This (Jamshedpur) is clearly a city that is thriving. It could be that the state is using the excuse of Jamshedpur to hold off on signing the agreement, and using this to pressure the Tatas (into giving up control of the city)," he added.

“If they (the state government) make an undertaking (to set up local bodies) for the remaining cities in Jharkhand, they can (still) be eligible for JNNURM funds," said M. Ramachandran, secretary, urban development, when told about the Supreme Court ruling.

Tata Steel argued before the court that the 74th amendment of the Constitution allows for five different types of local bodies—three elected and two by appointment. The appointed bodies include industrial townships and cantonment areas administered by the armed forces. The firm maintains that it fulfils the criteria to be notified as an industrial township.

“In 2004, the government had passed a cabinet decision that allowed for industrial township status for Jamshedpur and Bokaro, another industrial area in the state," said Choudhry. “But it was never notified. All we are asking is that we be given the status."

It is, however, not clear how long the apex court will take to decide the matter, with some lawyers, who did not wish to be identified, claiming that it could take up to five years to be resolved.

Jamshedpur, originally called Sakchi, was identified as a location for the Tata group’s steel plant by Dorabji Tata in 1907. He transformed a village into a thriving industrial township and the (British) government of India renamed it Jamshedpur after Dorabji Tata’s father Jamsetji Tata in 1919.


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Updated: 10 Jan 2008, 12:54 AM IST
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