The government has reportedly offered huge tax sops of over Rs 30,000 crore (Rs 300 billion) to Tata Motors for the Nano car project, according to the State Support Agreement (SSA) signed between Tata Motors and the Gujarat government on October 7, which was leaked to the media.
What is surprising is that the state government has not confirmed or denied the authenticity of the leaked document, though they denied that the amount of Rs 30,000 crore is the opposition's gimmick.
According to an agreement signed by the government, it has agreed to offer a soft loan of Rs 9,570 crore (Rs 95.70 billion) at an interest of 0.1 per cent for setting up the project.
It has decided to defer repayment for 20 years. The government has also offered to bear the cost of infrastructure development, a cut in power tariff rates and offered Rs 700 crore (Rs 7 billion) for shifting machinery from Singur to set up its plant in Sanand.
The Congress leaders in Gujarat have criticised the government's move, calling it a publicity stunt at the cost of people's money.
The government has also granted exemption on stamp duty for 1,100 acres of land offered at a subsidised price.
There will be no charge for transferring the land from agriculture to non-agricultural purposes and no registration fee.
The government will also develop roads, provide electricity and gas supply and offer an additional 100 acres to build a township for employees.
Congress leaders point out that the government would be taking a burden of Rs 60,000 for each car rolled out considering the huge repayment time and other sops offered to the Tatas.
They say that Narendra Modi is using the Nano project as a prestige issue to build his own image at a heavy price, denting the state exchequer.
To see in full, go to main source - http://specials.rediff.com/money/2008/nov/13slde6.htm
ASJ
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Can it cost less?
Denting the state exchequer?
Such moves are extremely essential to keep the economy running. We all know the tremendous 'ecosystem' that is created around large industries and services. The Nano was arguably the most prestigious project of year 2008 in the private industry domain. Modi cannot be blamed for trying to woo Tata. The returns for the state economy are tremendous.
In fact, all states were vying with each other to get the project. Maharashtra, Karnataka, Uttaranchal...
This may or may not be a 'publicity stunt' - I cannot say. But who will benefit from this? The people will, of course. What would the Government have done with the 'gains'? Built some flyover and shift bottlenecks in some city? Or have it get 'lost' in the immense corrupt bureaucratic/political machine?
Economic suicide
I have read differing figures but number of direct jobs created by this project is well under 10k (15k farmers lived of the Singur land).
Truth is that there is no CHEAP car. Its a hog-wash. If Tata had to pay the right price for the land, pay all taxes and import duties (and as did his suppliers) - the car would cost twice if not more.
The tax revenues are vital - I don't care about road widening as much as I do for the fact that 800 million live in relative poverty, in comparison to those who make and buy these costly toys. These people need health care, education, irrigation, sanitation, housing...........As a Nation we need sports facilities, investments in public transport etc.
Its a lie to say that Tata and the like will not build such projects without tax sops. Its nonsense to think and believe that FDIs will stop without tax sops. Capitalists go where there is a market, India has 1.1 billion of it.
At a time of climate change, time when we want to reduce dependence on energy, especially oil, time when countries all round are making buying a car costlier or introducing road pricing, our policy seems at odds.
The real costs can be calculated when intangiable costs are included. No one is adding to the above figures the costs of congestion, pollution, road traffic accidents (injuries and deaths)...all this will get worse as soon to follow Bajaj renault and Mahindra small car will also be added to the list of subsidised car makers.
Modi will make the most of this in the next elections by blowing the trumpet of bringing growth to the State.
This is not economic growth, nor development. This is slow poisoning, a suicidal move. We will all suffer in the times to come.
ASJ
www.driving-india.blogspot.com
Economic suicide
I have read differing figures but number of direct jobs created by this project is well under 10k (15k farmers lived of the Singur land).
Truth is that there is no CHEAP car. Its a hog-wash. If Tata had to pay the right price for the land, pay all taxes and import duties (and as did his suppliers) - the car would cost twice if not more.
The tax revenues are vital - I don't care about road widening as much as I do for the fact that 800 million live in relative poverty, in comparison to those who make and buy these costly toys. These people need health care, education, irrigation, sanitation, housing...........As a Nation we need sports facilities, investments in public transport etc.
Its a lie to say that Tata and the like will not build such projects without tax sops. Its nonsense to think and believe that FDIs will stop without tax sops. Capitalists go where there is a market, India has 1.1 billion of it.
At a time of climate change, time when we want to reduce dependence on energy, especially oil, time when countries all round are making buying a car costlier or introducing road pricing, our policy seems at odds.
The real costs can be calculated when intangiable costs are included. No one is adding to the above figures the costs of congestion, pollution, road traffic accidents (injuries and deaths)...all this will get worse as soon to follow Bajaj renault and Mahindra small car will also be added to the list of subsidised car makers.
Modi will make the most of this in the next elections by blowing the trumpet of bringing growth to the State.
This is not economic growth, nor development. This is slow poisoning, a suicidal move. We will all suffer in the times to come.
ASJ
www.driving-india.blogspot.com