IndiaInc: Govt plans transparent auctions for future land allotments to industry

India plans to use transparent auctions to allot land for future industrial projects in a bid to curb allegations of corruption.

Amid ongoing media scrutiny of the allotment of coal mining rights to private firms following the leak of a report by the Comptroller and Auditor General (CAG), the Hindustan Times reported Tuesday that India will no longer broker land deals for industry. Instead, a nine-member group of ministers constituted to tackle corruption and headed by finance minister Pranab Mukherjee has recommended that land be given out only through competitive bidding or transparent methods, such as e-auctions, the paper said.

In addition to the ongoing "Coalgate" saga, India's allotment of land to industrial projects ranging from Tata's Nano factory in Singur, West Bengal, to Vedanta PLC's alumina refinery and other projects in Orissa have raised the hackles of anti-corruption activists, grassroots' people's movements and environmentalists alike. 

In cases like the so-called "Coalgate" scam, critics have alleged that the government awarded sweetheart land deals and/or mining rights to private firms, presumably due to as-yet unsubstantiated kickbacks. In instances like the dispute over Tata's Singur factory, locals have claimed that government interference in the land acquisition process has kept prices artificially low, robbing local landowners of their due. And environmentalist organizations have argued that flaws in the process of allotting land and other natural resources has exacerbated India's ecological problems.

The new policy will require state governments to announce first why the land in question will be acquired, rather than acquiring a large tract for an unstated purpose and then allotting parcels to industry, the paper said.

As such, it will ensure higher price first to farmers or owners of land and later to the government agency that allots to industrial projects, a government official said.