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Real estate: A challenge for effective governance?
Parliament should debate and frame a new law for national housing and urban planning to replace the controversial development agencies mushrooming all over the country with their snake like fangs
During the British period, Indian travellers suffered at the cost of highway thugs for many centuries until the then British Governor General, William Henry Bentinck, ended it in 1835 with the ruthlessness it deserved. He was ably assisted by William Henry Sleeman, whom he appointed in-charge of thuggee and dacoity department. Bentinck’s success of eradication of thugs is one of the resounding achievements of British Raj in India. The thugs used to disguise themselves as businessmen, musicians, artists and fellow travellers. They used to loot unsuspecting travellers and kill them in cold blood. The menace was a reflection on the governance of that time and Bentinck became a legendary figure among modern Indian historian.
This statement has a context in today’s democratic polity of India, especially in view of the recent media coverage over the insolvency case in the National Company Law Tribunal against the JP builder and, probably, against the Amrapali also in Noida, filed by IDBI and other banks. Scores of flat buyers are sitting in dharna for the past many days in front of Amrapali builders corporate office in Sector 62, Noida, and others are agitating all over the National Capital Region (NCR) and other places to attract the attention of the Government to their plight.
If we examine the methodology the builders have adopted in connivance with the callous and corrupt officials of the Noida authority during the last 10 years, aided and abated by the previous political dispensations to lure the citizens to provide them their dream homes, it becomes clear that the unscrupulous builders in nexus have swindled lakhs of buyers by floating attractive misleading advertisements in newspapers.
Builders used the money collected from the buyers for some other activities like squandering it in their new-found flashy lifestyles and courting the powerful people. This tendency has also given rise to the emergence of real estate mafia all over the country and it is high time this nefarious segment of the society is busted like the thugs were busted by the British because the builders’ action is akin to thuggery, considering the way they get away with this modern thuggery.
Laws are being used as gateway by these people to ensure their safe escape. Flat owners are looking for the emergence of a modern-day Bentinck in Uttar Pradesh Chief Minister Yogi Adityanath, who promised to help flat owners, but so far, intentions have not been converted into tangible action programme as bureaucratic jugglery and unfair laws help the culprits indirectly.
The Modi regime has vowed to provide housing for all and, for the first time, the country has a Real Estate (Regulation and Development) Act, which aims to provide protection to the buyers but attempts are being made by lobbies to dilute it while framing the rules.
It is necessary to examine the ills of the real estate in its entirety from the point of view of buyers so that the new Act really helps the people. State Governments in the past used to promote group housing societies for different sections of society. Housing was affordable as people or societies themselves used to build the houses according to their choices. Then came the saga of authorities and development agencies all over, which used the housings sector as money spinner and lands were allotted at very high prices to the builders. Thus the cost of houses escalated. This was compounded by impracticable by-laws framed by these authorities/agencies. Builders, in the name of common area, arbitrarily invented the super area and net area concept to swindle the buyers. This allowed the builders earn huge profit and use common area for commercial activities. It was, hence, justified by the builders as they have to pay the authorities.
So, real estate became a business venture in NCR and other cities. This type of scenario breeds corruption of gigantic proportions and the builders started taking the buyers for a ride and the present situation is a manifestation of the wrong policies and programmes. Most politicians and bureaucrats have taken these as their personal fiefdom. It must, however, be said that the basic aim of these agencies was to ensure sensible, structured and systematic planning of urban areas. But the way they have been working, the purpose of creation has been defeated. The present regulatory regime has no real protection and enthusiasm for affordable housing which is left at the mercy of builders and in the cobweb of rules and laws which are mostly dubiously interpreted.
JP Infratech Limited insolvency order of National Company Law Tribunal has spread panic among the buyers and other builders are gleefully waiting to be made insolvent to escape the financial liability. The JP group as a whole must be held accountable and not only this particular company. Further, insolvency laws help only banks and financial institutions. Consumer forums have limited powers to fix the builders. Only the Supreme Court can issue directions like it did in the Sebi-Sahara case.
To have a dream house is a very special aspiration of the middle class and is part of the right to life as per our Constitution and the Government is bound to work towards this in a welfare state. More than three lakh people have booked their flats in Noida and Greater Noida and most of them have deposited over 80 to 100 per cent of the cost of the flats but there is no sign of delivery of the promised flats by the builders, especially Amrapali builder, who had to supply more than 35,000 flats. Similarly, many other builders, like Supertech Limited etc, have to provide housing to the people who are waiting for the last seven to eight years after paying the cost of the flats.
Now most of the builders are trying to wriggle out after squandering the buyer’s money. Their chairman and directors behave like the ‘Mugambo’ character of bollwood movie Shaan, who is never seen or approachable. Every adverse situation provides opportunities for future improvements. Before the situation gets out of control, seasoned Government leaders like Yogi Adityanath must take it in their own hand and out of the purview of their bureaucrats and treat it a political imperative to be handled at the national level. First thing the country could do is to frame a single set of rules to be notified by the Government of India to ensure uniformity with a focus on affordable housing and builders must be made accountable and land laws flexible.
Second, the culture of auctioning plots by Government authorities must be replaced by a sensible system that promotes housing and not the profiteering. Insolvency laws must be amended so that flat buyers are treated at par with other banks, as recommended by the Associated Chambers of Commerce of India and the liability of promoters should not only be restricted to the insolvent company but to all their and their dependents and partners assets. To end the current imbroglio, the Government of Uttar Pradesh should immediately take over the assets of these companies and appoint an administrator to complete the flats.
The Parliament should debate and frame a new law for national housing and urban planning to replace the controversial development agencies mushrooming all over the country with their snake like fangs. Will the Adityanath regime innovate and diffuse the situation and grab the opportunity to set a new trend in housing sector governance?
(The writer is former Director General of Indian Council of Forestry Research & Education, Chancellor of FRI University, and chairman of Foundation for Integrated Resource Management)
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