3.2 Excess payment of Market Development Assistance
Payment of Rs. 1.99 crore in excess of permitted rate for Market Development Assistance.
Government of India (GoI) modified (April 2010) the Market Development Assistance (MDA) to enlisted Khadi institutions from the existing rebate scheme to provision of assistance at the rate of 20 per cent of the production cost.
For items supplied to Government departments under Rate Contract (RC), which does not involve retail channel, the Khadi institutions were eligible to receive MDA at 11 per cent of the production cost. (GoI formula = (25 + 30) × (20 ÷ 100) = 11)
The Government of Karnataka (GoK) switched over to MDA from 1 April 2012, fixing the rate at 15 per cent of the production cost. As per the guidelines issued (April 2010) by the GoK, the conditions prescribed by the GoI were also made applicable to the MDA provided by State. The MDA being fixed at 15 per cent of the production cost, the Khadi institutions supplying RC items were eligible to receive MDA at 8.25 per cent of the production cost as per the GoI formula, specified in the guidelines. On scrutiny of the records (November 2014) of Karnataka State Khadi and Village Industries Board, Bengaluru (Board), Audit noticed that excess MDA was paid to 12 Khadi institutions for RC items during 2012-13 and 2013-14, without restricting the amounts to the admissible MDA at 8.25 per cent of the production cost. (GoK formula = (25 + 30) × (15 ÷ 100) = 8.25. )
As per the RC sales details furnished to audit, the MDA payable by GoK works out to Rs. 2.43 crore against which MDA of Rs. 4.42 crore was paid to these Khadi institutions. The excess payment of MDA in contravention of scheme guidelines works out to Rs. 1.99 crore. The Chief Executive Officer of the Board stated (August/October 2015) that the excess payment of MDA actually worked out to Rs. 64.51 lakh and Rs. 50.51 lakh had been recovered. The balance amount would be recovered in future releases. The Board, however, did not furnish the details of how the excess payment of only Rs. 64.51 lakh was arrived at. Also, contrary to their claim thatRs. 50.51 lakh had been recovered, Audit verified (October 2015) that only Rs. 30 lakh was actually recovered (October 2015).
The matter was referred to the Government in May 2015, followed by reminders in August and September 2015; their reply is still awaited (December 2015).
3.2 Payment of land compensation twice for same land
Land compensation payment was made twice for the same land resulting in erroneous payment of Rs. 1.84 crore due to non-verification of status of land by Karnataka Industrial Areas Development Board. In terms of circular issued by Government (March 2007) for acquisition of land for formation of industrial layout, the preliminary notification is to be made only after conducting joint measurement of land with Revenue Authorities.
Karnataka Industrial Areas Development Board (KIADB) acquired 1,612-08 acres of land for Harohalli Industrial Area (3rd Phase) in Ramanagar district which included 409 acres of land in Bannikuppe village, Harohalli hobli, Kanakapura taluk of Ramanagar district.
The preliminary notification for acquisition of these lands under section 28 (1) of KIADB Act and final notification under section 28 (4) was issued in October 2006 and January 2010 respectively. The joint measurement of the lands at Bannikuppe village was conducted by the Special Land Acquisition Officer, Bengaluru (SLAO) of KIADB with representative of the Revenue Department (Tahsildar, Kanakapura) during January 2013.
The land compensation was thereafter paid to the land owners between March and June 2013. The lands acquired for the industrial area included 14-10 acres in survey numbers 198/5, 199, 210/3, 210/7, 210/11 and 240 of Bannikuppe village for which land compensation of Rs. 2.28 crore was disbursed by KIADB.
Based on complaints about the payment of land compensation for Government lands, KIADB undertook spot verification (November 2013) which established the fact that 5-28 acres of land in Bannikuppe Village had already been acquired by the Land Acquisition Officer, Ramanagar for a minor irrigation project and land compensation had already been paid between 1980 and 1988.
Despite above, the KIADB had paid land compensation of Rs. 1.84 crore for 4-33½ acres (out of 5-28 acres) of Government land in 2013 which resulted in double payment of land compensation.
Revenue recovery suits had been initiated by the KIADB against the persons who had again received the land compensation amount for the same land for which compensation had already been paid. Audit scrutiny (September 2014) of records showed that following lapses contributed to payment of double compensation for the land: