Delhi Lieutenant Governor V K Saxena on Friday expressed “strong displeasure” with the Delhi Urban Shelter Improvement Board (DUSIB) for failing to revise the ground rent on its land and properties, which has led to “huge losses” to the public exchequer, according to an official statement from the LG’s office.
“Saxena has expressed strong displeasure over the lackadaisical approach of the Delhi Urban Shelter Improvement Board (DUSIB) in not revising the ground rent of its land and properties, thereby causing huge losses to the public exchequer,” the statement read.
To address the issue, the LG’s office has directed the CEO of DUSIB to conduct a fact-finding inquiry and identify the officers responsible for this “lapse in revising the ground rent.”
The matter came to light during the hearing of an appeal filed by Hindustan Petroleum Corporation Limited (HPCL) against DUSIB. It was revealed that “DUSIB had not revised the rent to be charged from HPCL despite mandatory provisions for the same.”
The statement outlined that in 1984, the Delhi Development Authority (DDA) allotted two plots of land in Shahzada Bagh Industrial Area and Sarai Basti Rohtak Road to HPCL for setting up filling stations. The allotment was on a 10-year lease with a stipulation that the rent would be revised every five years.
However, the LG’s office highlighted that this mandatory revision of rent every five years was not carried out for over three decades.
“The revision of ground rent after every five years, as mandated by the agreement, was not undertaken for nearly 30 years, and DUSIB suddenly raised a random demand of Rs 35 crore in 2018 along with interest on HPCL,” the statement noted.
LG Saxena criticised the negligence of DUSIB officials, stating that this issue revealed serious lapses in property administration.
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To rectify the situation, Saxena has directed DUSIB to recalculate the ground rent and develop a comprehensive policy within 30 days to establish clear guidelines for determining ground rent and other charges for all its land and properties.
“The LG also decided that HPCL would pay the revised principal amount and interest only from 2018, the year DUSIB raised the demand, rather than from 1984,” the statement concluded.
This move is aimed at ensuring accountability within DUSIB and safeguarding public funds from further losses due to administrative lapses.
Revising ground rent is connected to public exchequer losses because ground rent is a revenue stream for government bodies like the DUSIB. When rent is not revised as per the agreement or prevailing market rates, the government loses out on potential income that could have been collected over the years. This shortfall affects the public exchequer, which is the pool of funds used by the government for public services and development projects.
Lost Revenue Opportunity:
Agreements like the one between DUSIB and Hindustan Petroleum Corporation Limited (HPCL) typically include periodic rent revisions to account for inflation, increased land value, or market dynamics. Failure to implement these revisions means the rent paid remains stagnant, leading to significant financial losses over time.
Compounding Interest:
When revisions are skipped for decades (in this case, over 30 years), the gap between the actual rent charged and the potential rent becomes enormous. Even when the back payments are eventually demanded, they may not fully compensate for the missed opportunity to collect and reinvest these funds earlier.
Impact on Public Services:
Revenue from ground rents contributes to government funds used for welfare programs, infrastructure development, and urban improvements. Missing out on such revenues restricts the resources available for these initiatives, indirectly harming the public.
Legal and Administrative Costs:
Disputes arising from such mismanagement, like the appeal by HPCL, further strain government resources through legal proceedings and administrative efforts.
By failing to revise the ground rent, DUSIB not only allowed HPCL to pay outdated rates but also caused a substantial revenue gap, which directly impacts the funds available for public use. This is why Delhi LG Saxena has emphasized accountability and a policy overhaul to prevent similar losses in the future.
