CAG Audit Questions Amazon Data Centre Land Allotment in Hyderabad Pharma City
The Comptroller and Auditor General (CAG) of India has raised significant concerns over the allotment of 48 acres of land to Amazon Data Services India Private Ltd within the limits of the Hyderabad Pharma City (HPC). This move deviates from the original purpose of HPC, which was conceived as a dedicated pharmaceutical manufacturing cluster under National Investment and Manufacturing Zone (NIMZ) guidelines.
Deviation from Pharma Focus and Employment Risks
In a report tabled in the Telangana assembly, the CAG examined land allotments and project implementation in HPC, highlighting key irregularities. According to NIMZ guidelines, land in such zones must be used strictly for purposes defined in the master plan. However, the audit found that allotting land for a data centre represents a clear deviation from the stated objective of developing a pharma-focused industrial hub.
The CAG report emphasized that this shift could jeopardize the project's target of creating 1.66 lakh direct jobs. Data centres typically have minimal employment potential compared to pharmaceutical manufacturing units. The audit stated, "The allotment of land in the HPC for the establishment of a data centre was a deviation from the purpose for which the HPC was proposed. The target of generation of direct employment for 1.66 lakh people at the HPC was also jeopardised since the employment potential of a data centre was very minimal."
Additionally, by executing the sale deed, the Telangana State Industrial Infrastructure Corporation (TGIIC) lost the remedy of resuming the premises in case of non-implementation of the unit, further complicating oversight.
Government Response and Project Background
In its reply to the audit in October 2023, the Telangana government maintained that the project is still under implementation and that the allotment to Amazon does not impact the overall objectives of HPC. The government argued that the decision was taken in line with the framework agreement entered into with the company.
HPC, proposed during the previous government, was planned across 19,333 acres in Rangareddy district at an estimated cost of ₹19,098 crore, including ₹1,550 crore for land acquisition. The project was expected to attract investments of ₹64,000 crore and generate significant employment. Development was planned in two phases, with phase I covering around 8,200 acres between 2017 and 2020.
Delays and Fragmented Land Acquisition
The audit found that land acquisition has been fragmented, with 10,238 acres not contiguous. This has delayed even phase I of the project, leading to the non-achievement of the expected employment generation of 50,000 jobs in the initial phase. The report warned that delays could escalate project costs due to rising market value of surrounding land and potential demands for higher compensation.
Weak Institutional Monitoring and Systemic Issues
The CAG also flagged weak institutional monitoring. A special task force committee set up for speedy implementation of the project, which was supposed to meet monthly, met only three times till May 2016 and has not convened since.
Beyond HPC, the audit pointed to systemic issues in land management by the state's industrial infrastructure agency. It noted that despite holding a land bank of over 53,000 acres as of March 2022, the agency had not conducted periodic surveys since its formation in 2014. In the absence of regular surveys, it was unable to detect encroachments, track changes in land use, enforce contractual conditions, or ensure proper planning and maintenance of infrastructure.
The audit observed that inspections of industrial units were not carried out to check compliance with agreement conditions. This limited the government's ability to take corrective action or impose penalties where required.
State Government's Explanation
In its response, the state government said that due to non-alienation of certain lands, only advance possession had been taken and these were not reflected in the books of accounts. As a result, physical verification was not undertaken and reconciliation remains pending. It added that a special drive is currently underway to reconcile the land bank.
This audit highlights broader challenges in land management and project implementation in Telangana, raising questions about adherence to industrial development guidelines and the potential impact on employment and economic growth.
