HYDERABAD: The Comptroller and Auditor General (CAG), in a report presented to the assembly on Monday, raised concerns over the allocation of 48 acres to Amazon Data Services India Private Ltd within the limits of the Hyderabad Pharma City (HPC). The report noted that the land was initially intended for a dedicated pharmaceutical manufacturing cluster under the National Investment and Manufacturing Zone (NIMZ) guidelines.
The audit scrutinized land allocations and project execution, highlighting significant irregularities. According to the NIMZ guidelines, land in such zones must be exclusively used for purposes specified in the master plan. The CAG stated that allocating land for a data centre diverged from the original aim of establishing a pharma-focused industrial hub.
Concerns were also raised about job creation, indicating that this shift could undermine the project’s objective of generating 166,000 direct jobs, as data centres offer relatively limited employment opportunities. “The land allocation for a data centre at HPC deviated from its intended purpose. The target of creating 166,000 direct jobs is at risk due to the low employment potential of data centres. The sale deed execution has deprived TGIIC of the option to reclaim the premises if the unit fails to implement,” the CAG report stated.
In response to the audit in October 2023, the Telangana government asserted that the project remains in progress, and that the land allotment to the company does not compromise the overarching goals of HPC. The government maintained that the decision adhered to the framework agreement established with the firm.
The HPC, proposed by the previous government, encompasses 19,333 acres in Rangareddy district with an estimated cost of ₹19,098 crore, which includes ₹1,550 crore for land acquisition. The project is anticipated to attract investments totaling ₹64,000 crore and create substantial employment. Development is planned in two phases, with Phase I covering about 8,200 acres and scheduled between 2017 and 2020.
However, the audit indicated that land acquisition has been dispersed, with 10,238 acres not contiguous, causing delays in executing Phase I and resulting in a shortfall of the anticipated 50,000 jobs in this initial phase. The report cautioned that delays could escalate project costs due to rising land market values and possible compensation demands.
Weak monitoring
The CAG also pointed out deficiencies in institutional monitoring. A special task force committee, intended for efficient project implementation and required to meet monthly, convened only three times until May 2016 and has not met since.
Beyond HPC, the audit highlighted systemic challenges in land management by the state’s industrial infrastructure agency. Despite having a land bank of over 53,000 acres as of March 2022, the agency had not conducted periodic surveys since its establishment in 2014. This lack of regular surveys hindered its ability to identify encroachments, monitor land use changes, enforce contracts, and ensure proper infrastructure planning and maintenance.
The audit also observed insufficient inspections of industrial units to verify compliance with agreement conditions, which limited the government’s ability to enact corrective measures or impose penalties as needed.
In its reply, the state government indicated that due to restrictions on certain lands, only advance possession was acquired, which has not been recorded in account books. Consequently, physical verification was not conducted, and reconciliation remains pending. A special initiative is currently underway to reconcile the land bank.
