No discrepancies in Gift Project: Govt. of Gujarat

New Delhi, April 3, 2013: The GIFT PROJECT of the Government of Gujarat is an innovative model of international financial services centre based on the state-of-the-art technology to propel unprecedented economic growth, prosperity and development in the state and the country.
Except for the relatively nominal participation in share equity/project development fund at the initial stage, the State Government by merely leveraging the barren uncultivable land and unlocking its value has acted as a catalyst for the huge outside investment of the order of Rs. 78,000 crores over a period of time which will unfold tremendous economic prosperity and growth of the region.
GIFT Project envisages setting up of a Global Financial Hub, through a joint venture with Infrastructure Leasing & Financial Services Ltd. (IL&FS) over an area spread over the revenue villages of Shahpur, Ratanpur, Phirozpur & Valad of Gandhinagar District. 
GIFT has been incorporated with the common vision of development and implementation of International Financial Services City Project keeping in mind the socio-economic benefits that will accrue to the society and nation.
GIFTCL is a Special Purpose Vehicle (SPV) who’s Chairman till date has been a former Chief Secretary of the State Government.  Government of Gujarat is represented in the Joint Venture through its wholly owned undertaking company, namely GUDC, with senior most officers of the rank of Additional Chief Secretary/Principal Secretary from the State Finance Department and Urban Development & Urban Housing Department, as Directors on the Board of GIFTCL, to take care of and safeguard the interests of the State Government in particular and also that of the public, at large.
A detailed study was carried out in 2007 through a Consultant Company of international repute, namely, M/s McKinsey & Co. The study indicates that given the required infrastructure facilities and attractive real estate price, it will be possible to develop a Global Financial Hub in GIFT City, generating a total of about one million jobs in the next 10-12 years.
It is estimated that when fully developed, the additional revenue estimated to be accruing to the Exchequer of the State Government, would be about Rs. 4000 crores per annum and to the Exchequer of the Central Government, it would be about Rs. 7000 crores per annum.
The State Government decided pragmatically and consciously, to transfer 662 acres of government land to the Joint Venture Company at Rs. 1/- for the development of the Project, in relaxation of the standing policy of the State Government.
Government has created foolproof & safe mechanism for ensuring recovery of the cost of the land from the surplus amount. As per the Government Resolution of Revenue Department dated 22/03/2011, the surplus amount that would accrue to both the units during the first phase of the Project (initial development of ten million sq. ft.) will be shared equally (50:50) by the State Government and both the units. Thereafter during all the subsequent phases, the surplus amount which would accrue from the sale of ‘Development Rights’, in addition to the basic cost, would be shared by the Government of Gujarat and the GIFT Company on 80:20 basis.
From the position explained above, it could be seen that the surplus amount from the net profit generated, would also accrue to the State Government in a substantial manner.
In the long-term and in the larger interest of the society, Government has allotted this waste land for the development of GIFT City so as to bring enormous prosperity not only to the State, but also to the country.  The price in the surrounding area of GIFT has increased, of late, only due to the launching of this GIFT project & future development it will usher in. Otherwise, the price would have remained around `Rs. 40/- per sq. mtr. as stated above.
The success of GIFT Project will not only earn huge additional revenue to the government every year, but also bring immense tangible and intangible benefits to the society in terms of employment generation and the prosperity to the citizens of the State & the country.  The multiplier effects to the economy of the State and Country as a whole would be substantial.
Moreover, Government is not to be viewed a private commercial firm, which thinks only in terms of profit. Government functions in the larger public interest, for which, sometime, it has to depart from the standing policy and take decision as a special case in the public interest and for the overall and long term development of the State. Furthermore, in this case, Government is going to recover total cost of the land through surplus amount in the form of net profit which will accrue based on the realistic estimation and evaluation of the Project. Therefore, the question of the so-called loss of Rs. 2,760 crore, worked out on certain assumptions, does not hold good.

 

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Regards,
Meeenakshi Jha
Mutual PR