Even as the Congress-Janata Dal (Secular) government in Karnataka struggles to stay afloat, its decision to sell 3,700 acres of land to JSW Steel in Karnataka’s iron ore rich Ballari district has turned into a full blown political controversy.
The Bharatiya Janata Party’s state president B S Yeddyurappa on Sunday (June 9) alleged that the coalition government received kickbacks from the company. He threatened to launch a statewide protest on the issue.
In 2006, the same Congress-JD(S) coalition government in the state decided to allot 2,000 acres of land to JSW Steel on a lease-and-sale agreement at a rate of ₹90,000 per acre. This was in addition to 1,700 acres of land given for 10 years at ₹1.22 lakh per acre.
The subsequent JD(S)-BJP coalition headed by Kumaraswamy as CM and Yeddyurappa as industries minister issued a letter authorising the deal. These two land parcels were to be sold to the company based on conditions of employment generation in Ballari.
What is the controversy?
Based on the 2006 MoU, the ruling government decided to sell the land at ₹1.25 lakh an acre while the market value of the land near the steel plant was estimated to be 12-15 times higher than the quoted price.
The H D Kumaraswamy government justified the allotment under the terms of that MoU which said the lease-cum-sale of the land was to be converted into an absolute sale deed after 10 years. This alleged land allotment at throwaway price that opened a can of worms for the ruling government.
A section of Congress leaders were against the land allotment considering that the company, which entered into a joint venture with state owned Mysore Minerals Limited, owes the latter about ₹2,000 crore, including interest money.
The company, in a statement, said it fulfilled the lease terms and the state had to transfer the land based on the agreement. JSW Steel runs a steel plan with an annual production capacity of 12 million tonne in Ballari.
In 1997, it stated with 1.5 lakh metric tones of steel production per year and now plans to expand production to 18-20 million tonnes by 2020. The company invested close to ₹60,000 crore in Karnataka and claims it generated jobs by directly employing 25,000 people.
The Lokayukata report on the illegal mining scam that brought down the BJP government in 2012-13 mentioned JSW Steel as one of the accused for bribing and transferring money to Yeddyurappa owned trust as kickbacks. Between 2007 and 2011, the net profit of the company tripled.
However, after the Supreme Court ordered an investigation, the CBI court in 2016 acquitted both JSW and Yeddyurappa.
While JSW claimed that they would not do anything illegal, senior Congress leader H K Patil opposed the deal alleging a portion of the land might be worth ₹1.5 to ₹2 crore per acre because of its presence in the iron ore rich belt.
Patil opined that the state government ignored the fact that the company owes ₹2,000 crore to the state-run “Mysore Minerals” and went ahead and granted the land, which he alleged was in favour of the company.
Patil, while he was the rural development and panchayat raj minister, headed a cabinet sub-committee which closely monitored the illegal mining and export of iron ore cases in the state. The sub-committee then recommended the state to be mindful of long-term consequences of giving away land on sale to mining companies.
Besides the land allotment, the BJP leaders including Shobha Karandlaje and C T Ravi accused the state of being biased towards Jindal by giving them extra 3 tmcft of water for steel production, despite the state facing consecutive droughts.
Karnataka’s Industries Minister KJ George said the government was only implementing the commitment it made to the company in 2005-06. He claimed JSW met all conditions in the agreement and the government was bound to transfer the land based on the MoU.