How corruption has been eating into our land

At the root of India’s corruption epidemic is the business of land allocation. India does not have a rigorous framework of property titles. For historical reasons, much of the land in this country is government owned by default. Further, archaic, 19th century laws allow state governments to expropriate farm property and redistribute it to private entities, citing a decidedly bogus “public interest”.

This leads to a scarcity of land available in the free market. As such, it becomes very valuable. Real estate prices in India’s cities, for example, are astronomical. With the commodity of land being so prized, cash deals and a black-market property economy are inevitable. Unless this system is broken, corruption in India will never be seriously challenged. A strong Lokpal law may focus on big-ticket swindles at the very top — by Union ministers and Commonwealth Games organisers, for instance — but the fount of crony capitalism will not run dry.

The situation can be best explained with a case study. The office of the Comptroller and Auditor General (CAG) recently released its report on Maharashtra government public sector undertakings for the year ending March 31, 2009. It makes an interesting reference to the Maharashtra Airport Development Company (MADC), set up in 2002 to develop a “multi-model international passenger and cargo hub airport” in Nagpur.

In 2005, this project got the status of a special economic zone (SEZ). It was actively promoted by, among others, then civil aviation minister Praful Patel as a potential aircraft maintenance, repair and overhaul (MRO) facility. Boeing was talked about as a partner.

It was an ambitious venture and while it has not quite materialised yet, the Nagpur airport project is sitting on some 3,500 hectares. In 2005, it designed a land pricing policy, aiming to sell land to users of the airport-SEZ complex. On December 5 that year, the company board allotted 100 acres to Satyam Computers at the rate of Rs18 lakh an acre. Satyam agreed to set up an IT facility for the aviation sub-city.

As per MADC’s land pricing policy, Satyam should have paid a minimum of Rs24.28 lakh per acre. However, it was argued Satyam was benefiting from a discount due to an “early bird” offer. There had been no previous mention of an “early bird” incentive, and presumably the MADC authorities took this decision at the spur of the moment.

The story doesn’t end there. On December 5, 2005, itself, the MADC board also allotted 100 acres in Nagpur to Shapoorji Pallonji and Company, again for developing an IT facility. Shapoorji Pallonji was charged Rs26.3 lakh an acre and there was no mention of “any ‘early bird’ incentive”. All of this is there in the CAG’s report.

What is ‘not’ there is the detailing of the sordid nexus and the conflicts of interest that linked Satyam Computers (still owned and run by the Raju family) and the MADC top brass. The man who was vice-chairman and managing director of MADC till January 2011 was also non-executive director and chairman of Maytas Infra till January 2009.

Maytas was a sister company of Satyam. It bid for numerous high-profile infrastructure projects and the Raju family attempted to funnel Satyam’s money into Maytas. This triggered a chain of protests and inquiries that eventually led to the Satyam scandal and collapse in 2009.

Coming back to MADC and Nagpur, there are several issues that must concern us. The same person — a pushy, well-connected former IAS officer — serves on the board of two companies, one of them a state government undertaking. Wearing one hat, he approves a sweetheart deal that benefits a company that gives him his other hat. Astonishingly, his boss as ex-officio chairman of MADC is the (then) Maharashtra chief minister.

This scandal is only an illustration. Compared to the millions being discussed in the context of the spectrum and other swindles, the MADC favour to Satyam appears chickenfeed. That is not the issue. The point is, every day, far from public gaze, literally tens of dozens of such deals are done by a variety of government agencies and Union and provincial authorities.

They are too small to be noticed. No Anna Hazare fasts in protest. No prime time news shows discuss them. They slip under the radar. Those who execute them are immune to everything, and they will surely figure out a way to survive the Lokpal as well.