RTI exposes a revenue loss of 30000 crores in Maharashtra

Would you believe that Maharashtra loses over INR 30000 crores annually because of carelessness/corruption, and that this has not been exposed so far?

Are we really poor or are we thrust into poverty? The recent scams which have been unearthed give me a feeling that we may actually be quite well off, with enough resources. If the lakhs of crores of public resources being given away and snatched away by the few were to come to the public exchequer, we could be quite comfortable as a Nation. I have been pursuing one such scam in Maharashtra in which I believe that a few thousand crores of public money is being lost to benefit a few.

Maharashtra’s debt is about INR 2.5 lakh crore, and we pay the interest for this. A State owns many resources on behalf of the citizens. One of these is land. Governments sell some of the lands and give some on lease. The idea behind giving certain lands on lease is to basically have an inflation-proof investment and, sometimes, to encourage certain activities. Hence it offers lands on lease. It wishes to retain the ownership of the land so that it may ensure that its revenue matches with the growth in inflation.

A lease is a legal contract which primarily lays down the area which is leased, purpose for which the land is to be used, period of lease, lease rent and certain other conditions. When the lease expires, it may be renewed with the lessor increasing the lease rent as per the market price which broadly reflects the inflation in the intervening period, unless there is a condition dictating a renewal in a particular manner.

I have been pursuing one such scam in Maharashtra in which I believe a few thousand crores of public money is being lost to benefit a few.

When any individual or Institution gives land or a property on lease and the lease expires, a fresh lease is drawn up at the prevailing market rates if the lessee wants to continue. This simple principle has not been followed in Mumbai and in the State of Maharashtra. I have been told that this may be true all over the country. Some leases are renewed, while some are allowed to continue occupying the land at the old rates. What are the reasons for such irrational actions? This may be due to carelessness or corruption.

The Govt. has decided to offer the lands to the lessees at about 20 to 30% of the value! It has effectively offered a 75% discount sale-not on the market value, but a notional value. In Sharukh Khan’s case the market value is estimated as 200 crores, which is being offered to him for 8 crores!

Using RTI, I had discovered this in 2005 and drawn the attention of the Chief Secretary in a letter titled ‘Arbitrariness and huge loss of public money in Public lands given on lease’. I have now got the scanned copy of the file relating to this which has over 900 pages over the years, and has ended on a bizarre note. Let me share the route the Maharashtra Government has decided to adopt after 8 years of confabulations: The Govt. has decided to offer the lands to the lessees at about 20-30% of the value! I am shocked at this irrational action of the Government and think that it is about time that the citizens defend their revenue by telling the Government they will not accept this approach. It has effectively offered a 75% discount sale-not on the market value, but a notional value. In Sharukh Khan’s case the market value is estimated as INR 200 crores, which is being offered to him for INR 8 crores! A special category of citizens has been created who alone would be entitled to the 75% discount Sale. This violates Article 14 of the Constitution and also many Supreme Court judgements which have dealt with such cases.

In the 2G judgement, the Supreme Court  has said, “In conclusion, we hold that the State is the legal owner of the natural resources as a trustee of the people and, although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles, including the doctrine of equality and larger public good.” Many Supreme Court judgements have clearly enunciated the principle that the State must come to a market rate determination when giving resources such as land. The poorest man who may be starving is an equal and rightful owner of this land, and it is necessary that the appropriate revenue is obtained for him. I looked at the list of leases of lands given by the two Collectors of Mumbai (obtained in RTI) and decided to calculate the worth of the lands where lease deeds have expired and unauthorized occupiers are allowed to continue.

Some examples out of about 700 cases of Expired leases:

My calculations show that there is a revenue loss of about 2750 crores each year in the leased lands of the two collectors of Mumbai.

Some arguments have been advanced that there is no difference between a long term lease and ownership. I am offering reasons to prove how completely fallacious this argument is:

1. First and foremost, the leases given by the Public Authorities are of varying terms. It is worthwhile to ask why there are leases of terms ranging from 5 years to 99 years and also 999 years. Some have been given in perpetuity. Were these varying periods mere whims? A sensible investor or State may sell certain assets and also decide to give some on lease for varying terms and usage. This is to ensure particular development and to get increasing revenues after certain periods to counter inflation.
2. Sales of land were known and implemented even a century back. Hence to contend that a lease is the same as a sale is flawed. If the intention was to sell the land, it would be have been so recorded, and a sale deed made. In this connection I would like to cite the clause of one lease deed which mentions that the lessee had purchased a part of the land, and taken a lease on the balance.
3. A lease deed specifies usage, rent and a period apart from certain other conditions. It is a matter of shame that our erstwhile British masters were more conscious and conscientious in thinking of the need for the State to have a long term revenue model, which would increase the revenues in the future to meet inflation, whereas our Public Servants are colluding in eroding the citizen’s wealth.

My calculations show that there is a revenue loss of about INR 2750 crores each year in the leased lands of the two collectors of Mumbai, since no revision has been made in the lease rents where leases have expired. The Revenue department proposes to give Occupancy II rights to those whose leases have expired for a one-time cost of about INR 4050 crores! This is a 75% discount Sale offer to a select few only. Alternately, they propose to charge about 5% of the market lease rent from the lessees.

Since Maharashtra is about 700 times the size of Mumbai the revenue loss in the rest of the State because of expired lessees being allowed to continue at old rates is likely to be at least 10 times Mumbai i.e. about 27500 crores! Thus the total loss is likely to be over 30000 crores each year. Compared to this the total Central grants to the State are less than 15000 crores.

A lease is an inflation-proof revenue stream. This ensures that the State gets a revenue stream which copes with inflation and hence the State may have to collect lower taxes. The public loss is likely to be over 3 lac crores in the next decade, i.e. over 30000 rupees for each person in Maharashtra. Citizens must safeguard their revenue from a revenue department which seeks to deprive them and the future generations.