In a setback to Punjab's Information Technology sector, the SAD-BJP government has scrapped the 1,400-acre global information and knowledge city (GIKC) project in Rajpura township in the state's Patiala district less than two years after it was conceived.
During a July 27 meeting of the Punjab cabinet, chief minister Parkash Singh Badal informed ministers that the government could not go ahead with the project - being undertaken by the Punjab Information and Communication Technology Corporation Limited (Punjab InfoTech) - because of financial constraints.
The state government had during the last two years completed land acquisition (roughly the size of 800 soccer fields) at Rajpura and announced compensation to landowners.
Punjab InfoTech, a public sector unit, had taken a loan of Rs 126 crore from the State Bank of Patiala besides chipping in Rs 30 crore of its own for the project.
According to a senior Punjab government official, the entire exercise and the effort put in by various people associated with the project had gone waste. Not only had the government lost more than Rs 10 crore, but its reputation has suffered as well, he said. "The leadership lacked farsightedness to complete the project," said the official.
According to an estimate, the project would have attracted an investment of nearly Rs 7,000 crore from IT and other sectors.
"We have suffered a loss of Rs 7-8 crore on account of the loan we had taken from the bank on interest. The government did not deposit in bank the Rs 156 crore Punjab InfoTech had paid it for awarding compensation to landowners," Punjab InfoTech chairman Harjit Singh Grewal said. "Otherwise we could have recovered the loss by earning from the rate of interest."
He said government officials responsible for the project's collapse should be taken to task.
When asked why the project was scrapped, Grewal said it was the state government's decision and he could not say anything more.
The Punjab government had launched the GIKC project in December 2009 with much fanfare at Rajpura. By September 2010, the Punjab land acquisition collector had acquired 1,400 acres and announced Rs 8 lakh per acre to owners as compensation.
While a part of the land belonged to village panchayats, farmers who had been tilling it for many years claimed the rest.
Though there was no opposition to land acquisition as the tillers did not have a claim on the title of the land, they demanded Rs 18 lakh per acre to move out.
Punjab InfoTech agreed and sought an additional Rs 180 crore from the state government for this. However, the government declined the request.
Punjab InfoTech was supposed to set up IT and knowledge-based industries, engineering units (especially light automobile industries) and textile and food processing units at the GIKC.
The firm had hired reputed consultancy firms such as Ernst & Young. The consultancy firms were paid more than Rs 50 lakh as fee. Lakhs of rupees were also spent on holding meetings and tours of government officials related to the project.