At its meeting on Thursday evening, the state cabinet approved the allotment of 487 acres of government land, including 87 acres in Tippaluri village in Yerraguntla mandal and 400 acres in Nalingapalli in Kamalapuram mandal, to Raghuram Cements Limited for setting up a cement factory in the Chief Minister's home district.

The company will put up its plant and township on the site and also develop a green belt. Though it was barren land, the government preferred to fix a price well above the market value, apparently to ward off the charge that the Chief Minister was favouring a company in which his son is represented on the board of directors.

When the figure figured in the cabinet meeting, Dr Rajasekhar Reddy left the meeting hall, leaving the issue to be discussed by his cabinet colleagues. The cabinet unanimously approved the allotment.

Some ministers felt that the land price fixed by the government was on the higher side. They pointed out that large extents of lands were alienated to industries at many places in the state in the past for a throwaway price and there was no reason why a firm should suffer just because of its connection with the CM's son.

The actual market rate prevailing in the area was stated to be Rs 15,000 to Rs 18,000 per acre.

The district collector recommended a price of Rs 50,000 per acre for the land, which was barren and rocky. However, the Chief Commissioner of Land Administration fixed a price of Rs 1 lakh per acre, or six times higher than the market rate. The cabinet approved the rate recommended by the CCLA.