Government’s decision to lease prime real estate to private entities at subsidised rates leads to an annual loss of Rs 1,000 crore. G Vishnu reports
TWO WEEKS ago, TEHELKA exposed the brazenness with which eight five-star hotels in New Delhi have avoided paying rent totalling Rs 516.19 crore to the government (Delhi’s Posh Hotels are Five-star Defaulters, 3 September). In the second part of the investigation, TEHELKA unearths shocking details on how the Land and Development Office (L&DO), which comes under the Union Ministry of Urban Development, has allowed hospitals, schools and commercial establishments to default on rent to the extent of nearly Rs 3,000 crore in the past three years.
The Comptroller and Auditor General (CAG) report of 2009 on the performance of the L&DO, which is currently being examined by the Public Accounts Committee (PAC), prepared field reports on three hospitals (out of five audited) and three schools (out of eight audited). It found gross violations of lease agreements and misuse of prime real estate leased out for public purpose.
Of the three hospitals, Vidyasagar Institute of Mental Health and Neurosciences (VIMHANS) and Primus Ortho and Spine Hospital (POSH) have hardly complied with the basic requirement of providing free treatment to the poor. The lease agreement requires that economically weaker sections make up 25 percent of the OPD (Out-Patient Department) patients and 10 percent of those admitted. But this clause is seldom complied with. The third hospital, St Stephen’s, paid rent only once since 1979: in 2003-05. No wonder, the CAG felt it was “unjustified” to lease prime real estate to these private entities at subsidised rates.
The L&DO made allotments to 129 schools. Of these, 34 were aided schools, 35 were private recognised schools obliged to provide free education to 25 percent of students and the rest were private recognised schools not under any such obligation. Of these, three were made part of the field study.
DPS International, Pushp Vihar, failed to comply with the lease agreement of reserving 25 percent of seats for the poor, while Kendriya Vidyalaya, Andrews Ganj, allowed a private party to build an ice hockey rink. Bal Bharti Public School, Ganga Ram Hospital Marg, has indulged in encroachment and misuse of government land.
At the time of going to press, five of the six institutions contacted had not replied to TEHELKA queries. DPS International Principal Amita Mishra did respond, claiming that the Directorate of Education had supervised admissions in January this year and now 25 percent seats are reserved for poorer students.
What is baffling are the reasons the L&DO and the private entities give in a bid to explain away the irregularities. Missing records are cited so regularly that a possibility of collusion between the department and the entities cannot be ignored.
“There’s a nexus. The L&DO and the private players involved in these matters have hardly any credibility,” says a Congress MP on condition of anonymity. “It’s a matter of quid pro quo. For the clearance the official gives, the private players indulge him in fancy ways.”
According to sources, many PAC members, who are examining the CAG report, are startled by the degree of gullibility and mishandling in the department.
Unfortunately, there is nothing new in their dismay. Commenting on the magnitude of negligence and indifference in the L&DO, the CAG report of 2009 went on to state that even the figure of 968.47 crore loss for 2007-08 was incomplete as only partial details in respect of only a few lessees were furnished by the L&DO.
The fact that goes unnoticed is that a majority of the defaulters with a possibly bigger share of plots and consequently larger dues are being allowed to go scotfree because of the L&DO’s sloppy recordkeeping. As for the private players, it suits their interests when files disappear.
As TEHELKA found out through highly placed sources in the L&DO, the department has not taken any steps to revise rents. From this, it can be surmised that in the past three years, the government has suffered a loss of nearly Rs 3,000 crore.
‘It’s a matter of quid pro quo. For the clearance the official gives, beneficiaries indulge him in fancy ways,’ claims a Congress MP
To understand the deeper implications of this scam, one has to look at the L&DO’s style of functioning. Consider for instance, a CAG report filed in 2000 that quoted a review of the L&DO from 1998. “Irregular revision of ground rent resulted in accumulation of rent and loss of Rs 24.96 crore. Non-recovery had resulted in a loss of Rs 74.77 crore on account of breaches in 19 cases. Further, Rs 94.06 crore demanded in 122 cases had not been recovered. Rs 9.60 crore had not been recovered from educational, social and cultural institutions.
SINCE THEN, the Ministry of Urban Development has given innumerable assurances of reforming the L&DO. More than a decade has passed and there’s hardly any evidence of the ministry having moved an inch on its promise. The true picture gets nore worrying as several other private business entities in New Delhi have conveniently escaped paying leases that run into thousands of crores per annum.
On lease since: May 1984
Primus Ortho & Spine Hospital
On lease since: 1973
St Stephen’s Hospital
On lease since: June 1970
| DPS International
On lease since: April 2001
| Kendriya Vidyalaya
On lease since: 1968
| Bal Bharti Public School
Ganga Ram Hospital Marg
On lease since: 1963
In 1990, the CAG had noted the ineffective manner in which the L&DO was checking encroachment. In 2000, it was found that government land in Delhi measuring 100 acres and valued at Rs 930 crore was occupied illegally. In fact, during the 2000 survey, the CAG had noted that vacant plots were not demarcated properly, which in reality encourages encroachment.
But L&DO officials claim that there’s nothing to worry about as far as recovery of dues is concerned. “The process is still underway. Action is being taken as per law. Even if we don’t collect the dues this year, it will happen soon,” says a senior L&DO official on the condition of anonymity. “We have sent show cause notices to almost all these organisations. You have to understand that the plots were given bearing in mind public purpose. You have to give the lessees time to reply to our queries.”
St Stephen’s Hospital has constantly misused leased property. Since 1979, the hospital has paid rent only during 2003-05
THE OFFICIAL adds that revision of ground rent is being “seriously considered”. Point out to him the losses to the government due to the rents being way off the mark from the current market value, he snaps, “It is very subjective. The losses that you are stating are based on opinions. There are several components that have to be considered while coming to such harsh judgement.” So if L&DO says it has 19,995 acres, valued at Rs 1.18 lakh crore in 1984, CAG thinks it is worth Rs 3.44 lakh crore today and the rent should be calculated on this amount. This sounds very much like the ‘notional’ loss in the 2G scam, that CAG put at Rs 1.76 lakh crore but others disputed.
Since the Revision of Ground Rent (RGR) cell was established in 2003, the CAG auditors took up just 29 out of 1,085 cases that required revision, even though they found that only 10 lessees had accepted the revised rent norms.
Further, the L&DO has adopted a seemingly dubious freehold policy. Of the 60,526 leases administered by the L&DO, 28,824 have reportedly been converted to freehold. The policy of converting plots on freehold was limited to residential purposes. However, in 1999, the ceiling of 500 metres on plots that can be put on freehold was removed. In 2000, the ministry even allowed freehold for commercial purposes. The seemingly innocuous policy turns out, on closer scrutiny, to be designed to encourage favouritism.
“You cannot always expect an ideal policy on these matters,” argues another L&DO official. “Whereas you say that the freehold policy should be tightened and be subject to more regulations, there are several others who stress on further relaxation, even for commercial purposes.”
Thankfully, there is outrage about this culture of arbitrariness in political circles. “There is hardly any credibility in these deals. Anybody can get a plot converted to freehold if you can strike a deal with officials,” says Congress MP Sanjay Nirupam, who is also a member of the PAC.
But at the department itself they call the whole mess a deep-rooted malaise, not easy to fix. “The history of New Delhi begins from 1911,” explains a senior official. “That’s where our problems begin. All the irregularities have such a long history you cannot possibly solve all of them.”
However, the fact remains that the hospitals and schools that were given prime real estate on the condition that people belonging to the weaker sections of society would benefit from them in some way, have evaded the basic duty of every financially able citizen: of paying the dues computed for them. And the rents they are paying are ridiculously low.
G Vishnu is a Correspondent with Tehelka.com.