Monday, May 08, 2006

Corporate Subsidy

All across India, in name of development/jobs, private corporations are given land at concessional rates or free. This is true from software parks in South or industries in Orissa or the topic of discussion below Reliance in Punjab. One example of corporate subsidy being offered by the poor state/central governments.

Earlier I had pointed on blog about SEZ (Special Economic Zones) bill, which is full of corporate subsidies.

Who pays for this? Ultimately the state, the tax payers.

At what Cost? State govts which cant fund "agraian crisis" due to lack of funds (Maharastra), who have huge budget deficits pay these subsidies.

Who cares? Almost no one, because very few seem to be directly affected. This though smaller in proportion earlier has been rapidly rising with the new wave of "development".

I am not against development or new industrial parks or things coming up. But these are for-profit corporations and if they really feel worth it they can invest the money and buy up land at market rates. After all corporations are all for market to work and no government interference so why doesnt the principle apply here.

These are some arguments for doing this: like new jobs are created in the area, new taxes will be collected and so on. Agreed. But there should be transparency in how much subsidy the govt gives for these purposes and needs to be evaluated is it worth it?.

The Tribune, Chandigarh, India - Main News: "Punjab out to ‘gift’ land to Reliance
Crucial meeting today
Sarbjit Dhaliwal
Tribune News Service

Chandigarh, May 7
The Punjab Government is all set to offer the premium land worth several hundred crores to Reliance Industries Limited (RIL) for a song. A high- level meeting in this regard has been convened by the Chief Secretary, Mr K.R. Lakhanpal, tomorrow in his office.

Among others, who have been asked to attend the meeting include the Principal Secretary, Industries, the Managing Director of the Punjab Agro Industries and the Secretary of the Punjab Mandi Board.

What is being offered on a platter to the RIL is a piece of a 20-acre land at Mohali. The land belongs to the Punjab Mandi Board and was purchased by it about 18 years ago. The land is just close to the railway station, a prime location.

Of course, the Punjab Mandi Board is opposing the sale of the land to the RIL at a price it was acquired 18 years ago. “At present the worth of the land, if it is sold by earmarking plots, is worth Rs 200 crore. However, if the land is developed as a commercial site and sold for showrooms, it can fetch a price up to Rs 1,000 crore', say real estate analysts.

However, when this land was acquired by the Mandi Board, its price was only Rs 2 crore. The government has"


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