The NOIDA and Greater NOIDA areas adjoining Delhi have seen many developers run into severe financial difficulties after the government cracked down on the use of illicit funds in the real estate sector.
Moreover, the setting up of the Real Estate Regulation Authority (RERA) to prevent malpractices in the sector also hurt unscrupulous real estate players, especially in the National Capital Region.
As a result of the double whammy, many builders have frozen their ongoing development projects, leaving their customers — who have paid millions of rupees as booking amounts — stranded.
The flat-buyers have been conducting agitations demanding that the builders should either return their money or deliver their flats.
It was in this context that the government of Uttar Pradesh set up a committee to suggest a way out of the imbroglio.
The committee suggested that the government should nudge banks to provide capital to real estate developers. It also suggested that state-owned construction firm NBCC should take up a “few selected viable projects” and “complete the same” if the developers are not able to do so.
Many people, said the ministry, are portraying the recommendations as favors being done to real estate developers.
“It is being noticed that on various social media platforms the recommendations of the Report have not been clearly understood and it has been alleged that it favors the developers/builders,” it said.
The ministry said this was the wrong way to look at the recommendations, as flat-buyers can benefit only if the builders are able to complete their projects.
“It is important to note that main problem of home buyers of Noida, Greater Noida and Yamuna Expressway is that of the ‘stalled projects’ and the only relief for home buyers is to ‘get these completed and give possession of their booked home’ as early as possible. Therefore, each recommendation has been made keeping the interest of home buyers only,” it said.
“.. the main reason of the stalled projects is the ‘lack of fund’ and ‘non-availability of last mile funding’, therefore the Committee’s first recommendation pertains to RBI for issuing guidelines to enable Banks to fund this gap. It will help home buyers to get their homes,” it added.
It also pointed out that besides offering financial and infrastructural support to builders, the recommendations also contain several other provisions that seek to make builders more accountable and ensure speedy delivery of the stalled projects.
These include the setting up of a Real Estate Regulatory Authority in Noida or Greater Noida, the preparation of a panel Lawyers of RERA to assist the homebuyers in pursuing their cases before RERA and the introduction of Project Settlement Policy (PSP) to ensure that developers do not misuse the incentives being given to them under the broader initiative.