The Bengal government is toying with the idea of a policy switch through which it plans to convert unused leasehold land, distributed for the purpose of setting up industrial units, to freehold properties in the name of the lessee.
The move has raised a few eyebrows in the administrative circles as the government used to reclaim the plots earlier if the land for the purpose of industry remained idle for over five years.
Sources aware of the development, however, consider it a prudent move as such conversion will not only help generate funds, which the government needs to run various welfare schemes, but will also encourage entrepreneurs to use land when they deem it fit.
“If the proposal is implemented, it will brighten the possibility of more industrial units in the state," said a senior government official.
According to a source, putting the entrepreneur under "some sort of time pressure" does not always gel with the overall objective of industrialisation.
"Taking back land does not help the government at all as there are not enough investors showing interest in getting plots for industry in Bengal these days. The proposal is being considered because it is believed that if the plots are made freehold, the investors can be encouraged to set up industries on a portion of the land and use the remaining area for other purposes,” said a senior government official.
The Bengal cabinet had recently allowed Infosys to convert its 50-acre freehold land to a freehold plot to encourage the firm to set up IT and ITeS units on 51 per cent of the property. As Infosys can utilise the remaining 49 per cent of the land for other purposes, the company is apparently more inclined to use the land.
“The same policy may be followed to allow other investors, who could not utilise plots within five years of allotment for industries, to make their land freehold. There should be some preconditions to set up industries, but a large portion of the plots could be utilised for other purposes. This will encourage the investors,” said another official.
The sources said there were many investors who could not set up units after they were allotted land. For example, an investor was allotted a piece of land measuring more than 60 acres to set up a unit in Asansol. He had plans to set up an ancillary unit for several major steel plants that were proposed to be set up in the area.
“But as the proposed steel plants did not come up in the area, the plan for the ancillary unit was dropped. Now, if the investor is allowed to make the plot freehold, he may set up a small unit after using a portion of the land for other purposes,” said a source.
The change in the policy, the sources said, is being considered to encourage investors to set up units as freehold plots would help them get loans from banks by mortgaging the land. It has also been felt that there are more than 40 such investors who could use the allotted plots to set up units by scaling down the original plan. This will generate at least some jobs in the state.
The government also plans to impose a penalty on the lessee for not utilising the plot for five years before converting the property to freehold land.
“The fine may vary between two and 10 per cent of the current market price of the land depending on the size of the plots and the time it was left idle. This may bring a few hundred crores to the struggling state exchequer over and above the price it will get during the conversion of leasehold land to freehold land,” said a source.
A section of bureaucrats, however, said the policy should be framed in a careful manner and it had to ensure that the plots earmarked for industries were not completely used for other purposes, including real estate.
“The investors should give an undertaking that they would use a certain portion of the plots for industrial purposes. If they don’t use a portion of plots to set up an industry, provision of penal action against them should be incorporated in the policy,” said a source.
There is another reason behind the move, sources said. “The ruling party is keen on generating more jobs ahead of the Lok Sabha polls as lack of employment opportunities remains as the Achilles Heel for the ruling party,” said a source.