NOIDA Authority irregularities led to losses worth over Rs 55,000 crore: CAG report

File image of highrise buildings in Greater Noida (Source: Shutterstock)

The Comptroller and Auditor General (CAG) has observed in its performance assessment report on the Noida Authority that there were a raft of ‘irregularities’ in land allotment and approval of development plans, thanks to the nexus between builders and officials.

This led to a loss of Rs 55,000 crore to the state exchequer between 2005 and 2014, the report pointed out.

The irregularities took a toll on the Authority's finances as well. Even after dues from builders touched Rs 18,633 crore against an allotment value of Rs 14,000 crore, no action was taken against the defaulters, the report said.

The CAG’s report on Land Acquisition and Allotment of Properties in Noida in Uttar Pradesh, 2021, was tabled recently in the UP assembly. The report evaluated various loopholes, constraints and reasons that caused the delays in the Noida industrial area development.

What are the irregularities?

Nearly 80 percent of the plot allotment in the commercial category between 2005 and 2018 was secured by three real-estate firms — Wave, Three C and Logix Group, the report said.

Despite repeated violations by these companies in terms of outstanding dues that accumulated to Rs 14,958.45 crore, the Authority failed to act against them, the CAG noted.

Farmhouse schemes, launched in Noida in 2008-11, were without government approvals and allotments were done in a "questionable" manner, causing a loss of over Rs 2,833 crore to the exchequer, the report said.

Similarly, a much-hyped scheme to build a sports city in Noida led to losses of Rs 9,000 crore, and plots worth Rs 4,500 crore were allotted to entities that did not even meet the stipulated net worth, turnover or past experience, the national auditor said.

The central auditor also found that even land prices were fixed in an arbitrary manner and often at sub-par levels while launching schemes, following which allottees paid much lower stamp duty.

What will be the fallout of the report?

It needs to be seen what action will be taken against the errant stakeholders. Experts hope the audit would help make the system more transparent and streamline real-estate development.

“The immediate fallout would be apprehension and some slowdown in allotments/approvals from the Authority, which might impact projects in the pipeline. However, a check on processes and functioning of the Authority would improve transparency, better competitive play and healthy business environment in due course,” said Ashutosh Kashyap, Director, Advisory Services (North India) at Colliers.

The Authority may now have to take a re-look at the projects that are being planned, using the sub-division of larger plots. An immediate fallout of the same would be lower interest in larger plot sizes, especially in the residential segment as a single developer might not have the bandwidth to pull off larger projects, he said.

“Such irregularities hinder overall development. For instance, the sports city project failed to meet the completion deadline and is still under construction. Ultimately, the homebuyers continue to suffer,” said Prashant Thakur, Director & Head, Research, ANAROCK Group.

“Therefore, the move to get the audit done by the state government back in 2017 was a step in the right direction that would help make the system more transparent and streamline the real-estate development process. However, it needs to be seen what action will be taken against the errant stakeholders and how development can once again be brought back on track in Noida,” he adds.