In the first significant reversal of a decision taken by the previous BJP-led regime in Maharashtra, the state government has ordered the cancellation of a Rs 321-crore contract awarded to a Gujarat-based event management company for organising an international horse fair that came under the scanner for “serious financial irregularity”.
On December 26, 2017, the state-run Maharashtra Tourism Development Corporation (MTDC) Ltd entered into an agreement with Ahmedabad’s Lallooji and Sons to “conceptualise, design, execute, manage, and operationalise” the Sarangkheda Chetak festival in Nandurbar on a turnkey basis. The firm had previously been associated with the Kumbh Mela and Rann Utsav.
But on November 28 this year, the day the new Sena-NCP-Congress government led by Uddhav Thackeray was sworn in, the state’s tourism department, following orders from Chief Secretary Ajoy Mehta, directed the “immediate cancellation” of the contract.
“The agreement and the Expression of Interest that was floated was entered into without the government’s sanction. As it isn’t as per the Centre’s norms as well, it amounts to a serious financial irregularity,” said Under Secretary (Tourism) S Lambhate.
The MTDC has been associated with the event — organised every December and said to be one of the oldest horse fairs in India — since December 2016 to brand it on an international scale.
In November 2017, the MTDC’s board of directors, chaired by then minister Jaikumar Rawal, adopted a resolution to promote the event on a grander scale. The corporation then floated a tender to select an event management agency in the same month and selected Lallooji and Sons from three bidders.
According to the arrangement between the MTDC and the firm, Rs 321 crore was to be spent for organising and marketing the festival from 2017-18 to 2026-27. The Corporation further committed Rs 75.45 crore (inclusive of taxes) as viability gap fund (VGF) to the contractor over these ten years.
In September 2018, however, the office of the Principal Accountant General raised an audit objection, alleging that “excess expenditure had been paid to the firm”. In May this year, the state’s planning department red-flagged the project, questioning the move to release the VGF.
“There is no tourism policy to grant such VGF in Maharashtra,” the department stated. Further, it said that “executing an agreement and committing to the payment on the state’s behalf without taking prior approval from the state government or the cabinet was a serious financial irregularity”.
The department’s remarks were in response to an official file moved by MTDC through the tourism department for post-facto sanction for the VGF amount. The state’s finance department echoed the planning department’s view.
During the monsoon session of the state legislature, the Congress and the NCP, then in the Opposition, raised allegations of wrongdoing against Rawal who denied irregularities in the project.
In the absence of a state-level tourism policy to grant VGF, MTDC argued that the central government’s new VGF scheme — from January 23, 2018, to March 31, 2020 — for generating revenue in tourism projects had been adopted.
But the planning department pointed out that in the Centre’s policy, VGF was extended only for projects where permanent tourism infrastructure is built. Besides tent facilities, it argued that no permanent infrastructure was being built for the Nandurbar festival.
In August this year, the department questioned whether the fair was “revenue generating” at all. Senior tourism department sources confirmed that the government had received no income from the fair over the last two years.
With the Opposition questioning the project, sources said the then Chief Minister Devendra Fadnavis asked Finance Minister Sudhir Mungantiwar to look into the matter. But the state administration was clear that the funding could not be approved.
The finance department, meanwhile, has sought “fixing of accountability” for the “irregularity”, with questions also being raised about the bills raised by the firm so far — Rs 6.8 crore for the fair last year.