Choked by liquidity freeze, builders seek concessions

Ask govt. to cut premium, development charges by half

Hit by a liquidity crunch following the Non Banking Finance Companies (NBFC) crisis and banking sector meltdown, an embattled real estate sector has demanded significant concessions from the government in the Union Budget due on July 5.

Representatives of two apex bodies of leading developers and businessmen — MCHI-CREDAI and the National Real Estate Developers’ Council (NAREDCO) — met Union Minister for Housing and Urban Affairs and Civil Aviation Minister Hardeep Singh Puri and Minister of Commerce and Industry Piyush Goyal in Mumbai demanding concession in taxes at the Central level and a 50% cut in the premium and development charges levied on major construction projects in Maharashtra.

Sources said Chief Minister Devendra Fadnavis and Minister of State for Urban Development Yogesh Sagar have accepted the demands and directed Chief Secretary Ajoy Mehta to hold a meeting with Brihanmumbai Municipal Corporation Commissioner Praveen Pardeshi to complete modalities on what concessions could be granted given the State’s precarious financial situation.

The real estate sector has been complaining of a severe liquidity crunch ever since the NBFC meltdown. The government tightening the noose through the Real Estate Regulatory Authority (RERA) has worsened matters.

Mr. Fadnavis said the meeting on Saturday was called to address the issues of the housing sector to achieve targets set under the Housing for All and Pradhan Mantri Awas Yojna, and pending issues of slum rehabilitation and redevelopment projects. The government also discussed the need to create a land bank with the help of the developer lobby to construct more affordable homes.

A source present at the meeting said, “We heard them out and told them the government will consider their demands positively. We understand the liquidity crunch [the real estate sector] is facing and we are keen to address their woes in whatever manner we can.”

Mr. Puri later tweeted, “Joined my senior colleague Shri @PiyushGoyal, Maharashtra CM Shri @DevFadnavis & Minister Shri Radhakrishan Vikhe Patil for an interaction on the housing sector.”

Members of the real estate delegation said a host of other demands were presented to the two Union ministers. These included a sharp reduction in premium for FSI, making provision for enough liquidity to the cash-strapped sector and providing single window clearance.

“We discussed how to further improve the ranking in ease of doing business. Though a lot has improved, much more needs to be done. The costs are so high that it has become very difficult to do business. The approval process is also so long which affects the sector,” Niranjan Hiranandani, national president, NAREDCO, and chairman, Hiranandani Communities, said.

The developers demanded streamlining of the approval process at the municipal level. “The real estate sector is now undergoing severe depression. The costs are so prohibitive that it does not allow affordable housing and redevelopment in the city. We demanded that all high costs including charging of excess premium for FSI be reduced. We have asked the central government to improve liquidity in the system as all sectors have been affected by the NBFC crisis,” Mr. Hiranandani said.

He said they requested Mr. Puri to expedite height clearance of buildings coming up near the airport and in the airport funnel zone.

Nayan Shah, president, CREDAI MCHI, said the meeting would help make business viable and make housing affordable in the Mumbai Metropolitan Region (MMR). “A lot of key issues around the real estate industry in MMR and across India were discussed and many decisions have been taken in the presence of the Chief Minister. We hope for all the measures to be rolled out in due course both at the State and also Central level,” he said.

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Printable version | Feb 22, 2020 1:57:27 PM |

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