NHRM scam: Sugar coated deal for a favorite few

LUCKNOW: After exposing the rot in national rural health mission (NRHM), office of comptroller and auditor general (CAG) has bared the anomalies in procedure adopted for sale of sugar mills in the state. The report which has been submitted to UP's governor recently revealed that state exchequer was robbed several thousand crore rupees in sale of 21 government sugar mills.Citing the report, sources amount the losses to Rs 1,700 crores -- two times the total sanctions under NRHM.
All the 21 mills were sold off by public sector undertaking UP state sugar Corporation limited (UPSSCL). Five out of 21 mills - all of which were functional - were bought by liquor baron Ponty Chaddha, supposedly close to power quarters in UP. Another 11 went to a group having the group which has a Muslim BSP MLA as its board member. Sources claimed that a deeper scrutiny of these 11 mills could show that Chaddha and other player are part of the same group.
The misuse of power can only be guessed considering that stamp duty worth over Rs 180 crores was evaded in this process of favors. Citing the report sources said that that incorrect valuation of the land was accepted by the registering authorities that resulted in revenue losses worth Rs 100 crores (approximately). Not only this, short payments of close to Rs 80 crores were also received. And this is besides the 5% general discount on stamp duty and registration fees awarded to the buyer.
Under-pricing appeared to be the thumb rule adopted by officials in UP to sell the sugar mills. "The advisor to the disinvestment process reduced the value of the land of sugar mills between 3% and 30% and this resulted in a loss of Rs 90 crores to the public exchequer in case of four sugar mills alone," sources said citing the report. They added that the auditors were not satisfied with the justifications given by the state government as well.
The finding only substantiate procedural anomalies highlighted by farmer leader VM Singh in an application before Lokayukta Justice NK Mehrotra. Though the petition for investigation was disposed off on the alibi that the case was pending before the Lucknow bench of the Allahabad High court, the examples cited by Singh need mention. He cited the example of Amroha sugar Mill in Jyotiba Phule district. Spread across an area of 31 hectares, the said mill has a cane crushing capacity of 3,000 metric tonnes per day. While the cost of property alone was estimated to be over Rs 250 crores, the mill was sold off at a rate of Rs 13.94 crores.
Bhartiya Janta Party's leader Kirit Somaiyya - who has recently demanded a CBI probe in the case - cited the example of Bijnore Sugar Mill. The mill - sprawling over an area of 51 hectares - was equipped to crush 7,500 metric tones of cane. Sommaiya stated that the mill worth Rs 500 crores was sold for Rs 101 crores. Sources said that the report has cites that all this happened in collusion with officials machinery. "Collectors in districts where the sugar mills were located have identical orders. Then, in a dozen select districts, the auditors found that none of the committees formed to ditto the evaluation finalized by the department had any objections to anything," said sources.
The collusion at the top level stands supported by the fact that the average value of land and building was discounted by 25% in lieu of restricted land use, large land area, stamp duty to be paid by the purchasers and other constraints. This resulted in a loss of around Rs 190 crores. Another 240 crore rupees were slashed by reversal in the ratio of land value and discounted cash flow method which was calculated on the basis of 'corrected' (read decreased) land value. The value of plant and machinery was under estimated causing a loss of over 82 crore rupees which swelled by Rs 25 lakhs due to non-inclusion and valuation of trees in the mills.
Sources added that he auditors also found that mill specific anomalies as in case of a mill in west UP. Here, there are two mills situated at a distance of 13 kilometers. While selling the new mill the land of the old mill was clubbed along with the old mill which resulted in a direct loss of over Rs 250 crores (the estimated worth of the old mill). The evaluators did not consider the circle rate for valuation of land. This resulted in a net loss of over 462 crores. The official machinery also failed to maintain the secrecy of the bidding process which led to rigging of the provisions of the Competition Act-2002. They also changed the terms and conditions again and again.