Why NCP is unhappy with Chavan's pro-builder industrial policy

The Maharashtra cabinet on Wednesday approved the new Industrial policy, after a year’s delay, which proposes the conversion of special economic zones into industrial townships. The project will have a mix of industrial and residential areas.

As per the new policy, 60 percent of the area in the township would have to be reserved for industrial purposes, while the remaining 40 percent could cater to housing, infrastructure and other amenities. However, this blanket conversion of the land parcels is the main bone of contention between the Congress and opposition parties like the Shiv Sena and the National Congress Party that fear the move will only benefit industrialists and developers by acquiring prime land at low prices. They have termed the policy as a housing benefit which will help builders and developers at the cost of farmers and villagers.

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In the four-hour long debate on the policy at the state Cabinet meet yesterday, NCP ministers such as RR Patil, Jayant Patil, Chhagan Bhujbal raised objections over the reservation and warned chief minister Prithviraj Chavan from opening up prime land for real estate development.

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Vindo Tawade, leader of opposition in the Maharashtra Legislative Council told the Business Standard that the industrial policy is merely a political statement to make money. “This is aimed at mobilising massive funds ahead of 2014 assembly and parliamentary elections. We will certainly oppose it.”

And now even NGOs have joined hands with NCP in its claims that big realtors will use this opportunity to grab land at throwaway prices under the pretext of industrialisation.

The exit of SEZs has resulted in the availability of 26,000 hectare of land, of which only 14,000 hectares has been acquired as of now. A large portion of this 14,000 hectare land has been acquired jointly by the private sector and state undertakings such as the Maharashtra Industrial Development Corporation (MIDC) and the City and Industrial Development Corporation.

According to a Mint report, the reservation of land for residential and commercial purposes will however revive at least 17 real estate projects of SEZ developers in Maharashtra that were stuck due to problems in acquiring land or unfavourable changes in tax laws. Secondly it will allow an exit option to those developers whose plans were stuck due to anti-development protests by farmers .

Since the land is acquired mostly by MIDC, developers will have to obtain the formal approval only from this state body. However, NCP leaders want developers to seek permission of the Cabinet and also want the state undertaking that land be given back to them for residential projects instead of giving it away to developers from the private sector", said a report in the Business Standard.

NCP fears that developers will make supernormal profits by auctioning land to builders at throwaway prices. This is because Chavan has suddenly released vast tracts of land in prime investment areas of Raigad in Mumbai Metropolitan Region, Nasik, Pune and Aurangabad, among other districts and Pune, for industrial purposes but may now be sold for real estate due to the 40 percent reservation.

Under the new policy, the Integrated Industrial Zones will get a floor space index (FSI) of 1.5, allowing more buildable area, thereby easing the problem of acquiring additional land for expansion projects.

An NCP member is quoted by the Indian Express as saying, “When land was acquired for special economic zones from local villagers and farmers at throwaway prices, the idea was to develop the industrial sector to enable healthy competition and job opportunities. Now, the land is being made available to private players without any price.”

Despite reservations by the Opposition, the new policy focuses on strengthening small and medium industries and aims at an investment of Rs 5 lakh-crore and employment generation for 20 lakh people. The state government is striving to compete with Gujarat, Andhra Pradesh, Tamil Nadu, Karnataka, Orissa and Chhatisgarh and wants to raise the share of industry in the state gross domestic product (GDP) from 21.5% to 28% over the next five years.

The plan is also to develop Mumbai-Nashik Aurangabad-Amravati-Nagpur, Mumbai-Pune-Solapur, Mumbai-Ratnagiri- Sindhudurg corridors in addition to the Delhi-Mumbai industrial corridor.

The policy offers these integrated townships waiver from tax on electricity consumption, stamp duty and local taxes like octroi. It also offers 100 percent VAT rebate to mega projects with an investment of Rs 500 crore and also to MSMEs especially in tribal areas and naxalite-infested districts.

There will be concession of 50 paise in electricity duty per unit for a period of three years in backward areas of Marathwada and Vidarbha. It also offers Micro, Small and Medium Enterprises (MSMEs) 5 percent subsidy on capital investment in taluks classified as C and D for development purposes.

Other highlights included constructing helipads in industrial zones of MIDCs. In the MIDC industrial zones, women, scheduled castes and tribes, womens’ self help groups involved in production will be given priority for allotment of land up to five percent.