India's cheapest car piggy-backs on subsidies
the saga of Tata Motors small car project at Singur, West Bengal, took a twist on September 23. There were reports in the media that the company had begun rolling out of the state. It was also reported that the West Bengal government was resigned to the state losing the project. Tata Motors, it seems, has kept up its threat of moving out of West Bengal if protests against the project continued. Opposition to it notwithstanding, Tata Motors had indeed got a sweet deal in West Bengal numerous subsidies would have fuelled India's cheapest car. At the time this magazine went to press, it wasn't clear if the deal was off.
But let's go back to September 12 to understand how favourable the Singur deal is for Tata Motors.On that day the Calcutta High Court restrained the state government and the West Bengal Industrial Development Corporation (wbidc) from making public the 'secret' part of the agreement they signed with Tata Motors on the Singur project. The company had taken the West Bengal government and its industrial body to court after wbidc posted the text of the 'general' agreement on its website on a direction from the state information commission. The commission had received a Right to Information (rti) plea for such disclosure.
Tata Motors' lawyer argued before the court that the state information commission had violated the rti Act, 2005 by asking the state to display the agreement. Section 11(1) of the act says that when a third party--other than the rti petitioner and the government--is involved, a submission from it is needed for any information to be revealed. The company's lawyer also argued that the agreement between the three parties was a trade secret and could not be put in the public sphere. In effect, the company argued that the Nano project is a private commercial venture. In contrast, the state government had acquired land at Singur using an antiquated law--the Land Acquisition Act, 1894--that allows the state to take over land for 'public purpose'.
But what is in this 'secret' agreement that Tata Motors is afraid to divulge? It seems that the deal between Tata Motors and the West Bengal government involved much more than was made public by wbidc on its website. From it, one only gets a glimpse of the sops that the state government gave to Tata Motors. If there are more sops than that in the general agreement, then the company may have got away with the mother of all subsidies.
West Bengal government's subsidy package to Tata Motors includes subsidies on land, power, tax paybacks and a soft loan of Rs 200 crore. The state government will make efforts to maximize sale of products from the "Small Car Plant". The package, notes the agreement, is given to Tata Motors to match benefits it would have enjoyed in Uttarakhand and Himachal Pradesh, both designated backward areas with following central tax concessions