The report adds that the loss should have been borne by the state government rather than WBIDC, which is not a subordinate office of the government.

On the directive of the state government, the WBIDC acquired 1,006.45 acres of land at Singur, of which it leased out 645.67 acres to Tata Motors’. A portion of the remaining land, 190.44 acres, was leased out to 30 vendors of the TML. Another 70.78 acres were waterbodies and land meant for internal roads, sub-stations etc.

The corporation leased the land to TML for a period of 90 years at a value of Rs 96.72 crore. As per government directive for long-term leases, the lessee (Tata Motors in this case) should pay 95 per cent of the market value of the land as one term premium (salami) on the commencement of the lease. An annual rent at the rate of 0.3 per cent of the market value of the land would also have to be paid.

“The present value of aggregate of premium (Rs 91.88 crore) and cumulative annual lease rent (Rs 2.85 crore) comes to Rs 94.73 crore, at a discount factor of 10 per cent. Against this, the present value of cumulative lease rent of Rs 855.75 crore payable by TML over 90 years works out to Rs 18.62 crores at the same discount factor, entailing loss of Rs 76.11 crore to the WBIDC over the entire lease period,” the report states.

To this the WBIDC said that the discount was made as part of the “special incentive package” announced by the government for the TML.

The clarification was forwarded to the CAG by WBIDC management.

The CAG noted: “The management stated that the terms and conditions of the lease had been drawn in pursuance to special incentive package, decided by government for the TML. The contention is not tenable because (1) according to the company, WBIDC is not a subordinate office of the state government. Hence, the subsidy, if any, to be passed on to the TML should have been borne by the government and not by the company, which was already burdened with the liability to repay the loan and interest from its own fund at the instance of the government and (2) the details of special incentive package were not furnished to Audit though called for.”

The CAG also observed that the WBIDC had drawn excess loan than required which led to an additional interest burden of Rs 1.44 crore between September 2006 and July 2007.