CAG Flags ₹12.86 Crore Loss in West Bengal Land Deal With Flipkart's Logistics Arm Instakart

Key Highlights

• The CAG has alleged that WBIDCL incurred a ₹12.86 crore loss while allotting land to Instakart Services, Flipkart's logistics arm.
• According to the audit report, the land price was calculated by including non-allocable water bodies, resulting in a lower lease premium.
• The land was allotted at Haringhata Industrial Park in Nadia district on a 99-year lease.
• The West Bengal government defended the pricing, saying it was approved by the WBIDCL Board and the state Cabinet.
• The CAG rejected the explanation, stating that the Corporation's own pricing policy was not followed.

CAG Questions Land Pricing Formula

The Comptroller and Auditor General (CAG) has flagged an alleged ₹12.86 crore loss to the West Bengal Industrial Development Corporation Limited (WBIDCL) over the allotment of land to Instakart Services, the logistics arm of Flipkart, at the Haringhata Industrial Park in Nadia district.

The findings are part of the CAG's 2024 report on Public Sector Undertakings, covering the financial year ending March 31, 2023, which was recently tabled in the West Bengal Assembly.

According to the audit report, WBIDCL calculated the lease premium using the total project area, including water bodies that were not available for industrial allotment, instead of using only the allocable land as required under its pricing policy.

How the Land Was Allotted

According to the report:

• In 2017, the West Bengal government approved the transfer of 1,326.93 acres of land to WBIDCL for industrial development.
• The state sanctioned ₹206.73 crore for acquiring 358.19 acres for the Haringhata Industrial Park.
• WBIDCL invited investors in August 2018, fixing the lease price at ₹63.49 lakh per acre.
• Instakart Services applied for 107.35 acres to establish a regional distribution centre with a proposed investment of ₹991 crore.
• The proposal received approvals from the WBIDCL Board and the state Cabinet before land was allotted.
• An additional 1.77 acres was allotted later, taking the total leased area to 109.12 acres under a 99-year lease.

The Haringhata facility later became Flipkart's largest fulfilment centre in India, featuring approximately 50 lakh cubic feet of storage capacity.

Why the CAG Says There Was a Loss

The audit report states that the industrial park includes 55.89 acres of water bodies, which cannot be allotted for industrial use.

According to the CAG:

• The actual allocable land was 302.299 acres, not the full 358.19 acres.
• WBIDCL should have calculated the land price using only the allocable area.
• Applying its own pricing policy, the base price should have been ₹75.23 lakh per acre, instead of ₹63.49 lakh per acre.

Based on this calculation:

The CAG concluded that the difference resulted in a financial loss to WBIDCL.

West Bengal Government's Response

In its response to the audit observations, the West Bengal government stated that:

• The pricing had been approved by the WBIDCL Board after detailed deliberations.
• The state Cabinet also approved the allotment using the same valuation.
• Therefore, the lease premium was fixed following due administrative approval.

CAG Rejects Government's Explanation

The CAG maintained that administrative approval alone did not justify departing from the Corporation's own pricing methodology.

The audit report further noted:

• Water bodies identified within the project area were not available for industrial allotment.
• The West Bengal Inland Fisheries (Amendment) Act, 1993 places restrictions on filling water bodies without prior government approval.
• The report also referred to judicial observations regarding the protection of water bodies.

According to the CAG, these factors reinforced the need to exclude non-allocable land while calculating the lease premium.

No Allegation Against Flipkart

The CAG's observations are directed at the land pricing and allotment process followed by WBIDCL.

The report does not allege any wrongdoing by Flipkart or Instakart Services. The audit focuses on the valuation methodology adopted by the state agency while determining the lease premium.

Why This Matters

The audit findings could intensify political debate over industrial land allotments and government pricing policies in West Bengal.

CAG reports serve as audit observations intended to identify possible procedural or financial irregularities. They do not, by themselves, establish criminal liability or wrongdoing. Any further administrative, legislative or legal action would depend on the response of the concerned authorities and subsequent proceedings.

Frequently Asked Questions (FAQs)

What has the CAG alleged?

The CAG has alleged that WBIDCL incurred a ₹12.86 crore loss by underpricing land allotted to Instakart Services due to the inclusion of non-allocable water bodies in its valuation.

Which company received the land?

The land was allotted to Instakart Services, the logistics arm of Flipkart.

Where is the project located?

The land is located at Haringhata Industrial Park in Nadia district, West Bengal.

Has Flipkart been accused of any wrongdoing?

No. The audit report questions the pricing methodology adopted by WBIDCL and does not allege wrongdoing by Flipkart or Instakart Services.

What was the West Bengal government's response?

The state government said the pricing was approved by the WBIDCL Board and the Cabinet, but the CAG maintained that the Corporation's own pricing policy should have been followed.