Baba Ramdev is a favourite topic for media and so is his brand Patanjali, though most of the times they are in the news after media decides to either spin or lie about them. In February this year, we had seen how some in the media lied about the FMCG business of Patanjali being tax free, when it was not. Now something similar seems to have happened.
On 23 May 2017, Reuters published a special report on how Baba Ramdev and Patanjali’s fortunes have soared in the last 3 years i.e. after Narendra Modi led NDA government came to power.
The report begins with the authors talking about 2014 Lok Sabha election – how Baba Ramdev endorsed Narendra Modi and how BJP led by Modi swept to power. This seems innocuous at first glance, however upon reading further it becomes clear that this is an attempt to insinuate some sort of quid pro quo between Ramdev and Modi.
For example, a few sentences from the report are quoted below –
Ramdev’s business has boomed since the BJP took power. Revenues at his consumer goods enterprise are soaring – from about $156 million in the financial year ending March 2013 to more than $322 million in the year to March 2015, according to financial filings. In early May, Ramdev said revenues in the financial year just ended had jumped to about $1.6 billion.
Since Modi came to power, Ramdev’s company has received more than an estimated $46 million in discounts for land acquisitions in states controlled by the BJP, according to a Reuters review of state government documents, interviews with officials and real estate estimates.
In the BJP-controlled states, Patanjali received a discount on the land purchased of 77 percent off market prices, according to state government documents, interviews with officials and land values provided by local real estate agents.
Whoa! So is Narendra Modi guilty of showering favours worth $46 million, thus misusing his powers? This is as bad as coal scam under Manmohan Singh’s watch, suggested some alleged economists and “liberals”.
But unfortunately for them and fortunately for India, this is far from truth. While Patanjali Ayurved (the consumer goods company) did get land at concessional rates, there is no apparent impropriety or quid pro quo as insinuated by Reuters and sundry commentators.
Let’s go into the specific allegations/insinuations –
1) Patanjali received a discount of more than $10 million, or 88 percent, on a 40-acre plot in the BJP state of Madhya Pradesh last year
In September 2016, Madhya Pradesh Government allotted a 40 acre plot in Pithampur industrial area at Rs. 10 crore to Patanjali Ayurved to set up a food processing plant. Reuters claims that Patanjali Ayurved got a discount of 88%, meaning that the actual price of the 40 acre plot was around Rs. 83 crore. This translates to Rs. 5127 per sq m. If Reuters had done a little research, they would have found out that –
- For large scale industries, land in Pithampur industrial area is available at a premium of Rs. 1253 per sq m for a 40 acre plot, significantly lower than the rate claimed by Reuters. (Source – MP Trade and Investment Facilitation Corp. Limited website)
- It is a common practice for state governments to offer land at concessional rates in order to attract investments. MP government has been providing industrial land at concessional rates at least since 2004. It is clearly mentioned in their Industrial Promotion Policy of 2014 [pdf] and the concessional rate of 25% premium has been mentioned in the Industrial Promotion Policies of 2004 [pdf] and 2010 [pdf].
- Patanjali Ayurved is not the only beneficiary of concessional land rates. In the same year, MP government also allotted land to Micromax at the same concessional rate of Rs. 25 lakh per acre. Reliance Group was also allotted land at the concessional rate of 25% premium to set up its defense and aerospace park.
Thus it is clear that Patanjali Ayurved did not receive any special favours from MP Government because of Ramdev’s proximity to BJP. Reuters report says that the PMO did not respond to its queries about this allotment. Why Reuters sent their queries about MP government’s decision to the PMO is unfathomable.
2) Patanjali had paid some 590 million rupees (about $9.1 million at current rates) for the 234-acre land in Maharashtra’s Nagpur. The land abuts a special economic zone (SEZ) promoted by the state and its market price was more than 2.6 billion rupees (about $40.5 million)
Again, Reuters insinuates that Patanjali Ayurved got undue favours in getting the land cheaply for its food park. The facts are as below –
- In early 2016, Patanjali Ayurved made a proposal to Maharashtra Airport Development Company (the agency responsible for development of MIHAN area) to purchase the land. However, MADC went for global open tenders as the rates offered by Patanjali were very low. The reserve price in the tender was fixed at Rs. 25 lakh per acre.
- In the first round, only two players (including Patanjali) submitted technical bids. In the two subsequent rounds, Patanjali Ayurved was the sole bidder. The conditions called for having minimum three bidders.
- As MADC failed to get more bidders even after the third round, the matter was put up before the board of directors of MADC and Patanjali Ayurved was declared as the successful bidder.
The Reuters report also suggests basis a video that Nitin Gadkari, who was present at the stone laying ceremony of the food park decided to convert a road into national highway to benefit Patanjali’s food park. This decision was likely a part of a much bigger plan to convert more than 15,000 km of state roads into national highways and was taken much before Patanjali Ayurved won the bid for MIHAN land. Interestingly, the video which Reuters report refers to also shows Gadkari laying out the above facts about the tendering process. However, Reuters seems to have ignored this part.
3) The largest transaction was a transfer of some 1,200 acres of undeveloped land in the eastern state of Assam in October and December 2014. According to state legislature documents reviewed by Reuters, the land was “allotted without cost” – given free of charge – to Patanjali Yogpeeth, a trust controlled by Patanjali Managing Director Balkrishna and Ramdev
The said tract of land was allotted by the Bodoland Territorial Council, which is the administrative authority for four Bodoland districts of Assam. The said land was unused according to reports, primarily due to frequent floods caused by a nearby river.
An important thing to note here is that the land was NOT allotted to Patanjali Ayurved, the company which manufactures and sells Patanjali brand of consumer products. It was allotted to Patanjali Yogpeeth, which is a charitable trust and thus cannot use that land for commercial purposes. Hence it is wrong to suggest that the consumer goods business of Patanjali benefited from this agreement.
Reuters further tries to mislead readers by confusing Patanjali Ayurved with Patanjali Yogpeeth, which is apparent from another sentence in their report –
The Ministry of Finance in 2015 defined yoga as a “charitable purpose,” reducing the associated tax burden. That particularly benefits corporations such as Patanjali that have espoused support for the kind of Hindu nation envisaged by the ruling party.
This statement is factually incorrect. Patanjali Yogpeeth is a public charitable trust that does not have any legal connection to the consumer goods business. Patanjali Ayurved, which owns the consumer business, is a public company registered with the RoC and is subject to the same regulations under which other FMCG companies like Unilever, ITC, etc. are taxed.
Throughout the Reuters report, authors repeatedly mention that they have reviewed several documents to prove their claims. But the only documents they have provided along with the report are some inconsequential ‘oaths’ signed by BJP leaders before the Lok Sabha election. One can guess why the authors didn’t provide any other legal document to prove their claim – because doing so would have presented the complete picture to the readers, not half truths which the authors seemingly wanted to peddle to build a narrative.
As expected, the report was reproduced/quoted by news portal Huffpost India, leftist propaganda blog Scroll, British tabloid Daily Mail, Congress mouthpiece National Herald and Marathi daily Loksatta. However, none of them bothered to verify Reuters’ claims.