Many stuck real estate projects can be completed if the government rationalises the penal interests on developers’ pending dues, says the Chairman of the Confederation of Real Estate Developers Association of India-National (CREDAI-National).
Manoj Gaur says there is a scope of reducing Rs 6,000 crore to Rs 7,000 crore of total dues and the developers will be able to pay the remaining amount.
Times when there have been disruptions in the completion of projects because of COVID-19, construction bans and farmers’ issues should be declared a zero period, Gaur said in an interview.
CREDAI also made a representation to a central government-appointed committee on stuck projects led by former NITI Aayog CEO Amitabh Kant on May 29.
In the meeting, the developers’ body demanded that the authorities and the government of Uttar Pradesh adopt Haryana’s one-time settlement (OTS) policy to solve the issue of pending dues of builders.
Disruptions in UP
In Noida and Greater Noida, Uttar Pradesh, there have been several disruptions, be it farmers’ issues, construction bans ordered by the National Green Tribunal or COVID-19. Progress of projects in both areas has been affected, causing developers’ dues to snowball.
“There is no problem in paying land dues and interest but continuously there have been disturbances (in projects) and penal interest converts into capital so that is the main contention. There should be no penal interests. We suggested how pending dues of builders can be rationalised. They should declare a zero period for the time whenever there have been disturbances,” Gaur told Moneycontrol.
Gaur, who is also CMD of Gaurs Group, added that a report on stuck projects by the Amitabh Kant committee is expected in the next two months.
He said the calculation of dues should be rationalised and penal interests waived. By including capital costs or penal interest, the authorities have calculated builders’ dues to the tune of above Rs 11,000- Rs 12,000 crore.
“Rs 6,000 crore to Rs 7,000 crore can be rationalised easily and developers will be able to pay the remaining amount. In current scenario, the authority should look for getting dues and interest but several penalties have been imposed in different heads. So the government should have no problem in doing away with those penalties but for this there should be a recommendation from the committee approved by the government,” Gaur said.
Market conditions now conducive
Gaur, who is also president CREDAI-NCR, said that if the measures he suggested are taken, a number of stuck projects can be completed with the help of the Noida and Greater Noida authorities.
Many projects that were net worth negative have now become net worth positive due to more conducive market conditions, he said.
Gaur said that the authorities and the government in Uttar Pradesh should adopt Haryana’s OTS policy where the builder simply has to pay 100 percent dues and the 75 percent penalty and interest is waived.
“We are constantly in touch with all the decision makers and hopefully we will get some (positive) outcome soon,” he said.
He said the developers’ body had also attended a meeting with the Noida Authority in May along with representatives of various banks over stalled projects.
In the meeting, the concerns of all stakeholders were heard and a representation from CREDAI was also made seeking support from the Authority in addressing problems, he said.
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