In UP, freebies to real estate players kept under wraps, finds CAG report

For 13 years, the Noida city administration has not offered any accounts of its activities to the Uttar Pradesh state government. This comes from the data put out by the Comptroller and Auditor General last week.

In next-door Ghaziabad, two firms led by relatives of late Ponty Chadha, the liquor baron of the state, got a financial generosity of ~572.48 crore.

The transgressions happened before the Yogi Adityanath-led BJP state government came to power. But the audit report also points out that in several cases while the current state government has accepted the audit paras, yet it “did not intimate any action plan for (their) recovery” from the offenders.

Noida is one of the five urban entities of the state, including capital city Lucknow Industrial Development Authority, which have not filed their annual accounts since 2005-06. No wonder, gems like a massive ~712.74 crore of giveaways to real estate developers by Ghaziabad Development Authority have remained under wraps in the state government accounts so far.

The auditors have reviewed the period 2005-06 to 2017-18 in their report “Economic Sector and Public Sector Undertakings, of the government of Uttar Pradesh”, placed in the state legislature on Friday. It is understood that the audit of Noida and the other urban bodies, which is now underway, could throw up even more startling numbers.

The report also shows the state has financed its four power sector distribution companies to the tune of ~1.18 trillion in almost two decades since 200001. The net present value of these equity and long-term loan is calculated at ~1.90 trillion. The sum is about 14 per cent of the state GDP as of 2017-18. The combined net worth of these companies according to the auditor is a negative ~60,606.46 crore. The state government has decided to privatise some of these companies but their employees are up in arms. They held a protest on August 18 and announced plans for more agitation. Meanwhile, there are reports of blackouts from more than one cities of the state.

The data from the CAG report shows why India’s most populous state is in such a massive financial mess, limiting its ability to offer any major financial sops to major investors. The report has also named senior officers of the state government for having glossed over the freebies.

For instance, it notes in its special report on Ghaziabad Development Authority (GDA) that the sops offered to various promoters of real estate projects without paying the compensation to the farmers was objected to by the state government’s legal department. “The opinion of the Sanyukt Shaskeeya Hastantarak, legal department, GOUP, mentioned that non levy of land use conversion charges would amount to ‘post bid benefit’. This specific opinion was overruled by the (then) principal secretary, legal department.”

As a result, the GDA gave benefits to a private medical college, group housing societies, including one for policemen and others. Of these, the biggest was the handout promoters of Hi-tech city projects within Ghaziabad. Both the promoter companies, Uppal Chaddha Hi-tech Developers and Suncity Hi-tech Infra in the project, got 4,722.19 acres for which, according to the Master Plan of the city, they were to pay conversion charges. The charges were for converting agricultural land to residential projects.

The damning audit report states: “This resulted in extension of an undue benefit to the developers and loss to the Authority of ~572.48 crore.” While the paras of the report indict the past government of the state led by Akhilesh Yadav of Samajwadi Party, it notes in many cases like that of GDA that the present government led by Yogi Adityanath of BJP has also made no effort to make the offenders pay. “In the meeting with Audit, (the state government) accepted the contention of Audit but did not intimate any action plan for recovery of the land use conversion charges.”