Diwali delights for SRA developers struggling to end projects

The state government has brought a Diwali delight for real estate developers struggling to complete Slum Rehabilitation Authority’s projects. Nearly 3,500 SRA projects that were stalled were due to several reasons will now get a push. The government has roped in State Bank of India (SBI) for the project by signing a Memorandum of Understanding (MoU).

The state government will fund the construction of the rehab component through the Shivshahi Punarvasan Prakalp Ltd (SPPL), whereas, the State Bank of India will give loans to developers of SRA projects to construct saleable component that have been stalled due to financial crisis .

Commenting on the move, housing minister Prakash Mehta, said, “There are thousands of SRA projects that have been stalled due to several reasons. The most affected people are the slum dwellers who are deprived of permanent accommodation. Funding developers for the project will directly benefit these residents.”

Also, the developer will be conditioned to reserve certain percentage of houses to provide affordable housing stock to the authorities.

A senior official said that the bank will issue loans to the developers on a condition wherein they will have to provide certain amount of housing stock to the authorities.

He said, “The developers will have to construct affordable housing in the his saleable component only. The flats will be around 30 square metre and are likely to be sold under the Pradhan Mantri Awas Yojana. The beneficiaries of the scheme will also be given subsidies decided by the government.”

The loans will be given to these developers at an interest rate of nearly 8 per cent.

Pankaj Kapoor, said, “Generally construction finance varies from 12-13 per cent. It is a good move not only for the developers but mainly for the slum dwellers. I think cheaper capital and viable solution is always beneficial for all the stakeholders whether it is the developer or the slum dweller.”

Anand Gupta, senior member of Builders Association of India, has welcomed the move saying, “The government has taken a progressive step towards completing the stalled SRA projects. Most of the times, the projects are stalled due to financial crisis faced by developers. By funding these projects at a cheaper market rate, the government is directly benefiting the slum dwellers that are awaiting permanent accommodation.”

While developers have welcomed the move, activists are criticising the move stating that the government is financing builders at cheaper interest at a time when there are already in debts.