“We are do­ing all that we can to em­power the home buyer in this coun­try”

HT Estates - - HTESTATES - Nam­rata Kohli letters@hin­dus­tan­times.com

Hardeep Singh Puri is the cur­rent Union Min­is­ter of State with In­de­pen­dent Charge in the Min­istry of Hous­ing and Ur­ban Af­fairs. A 1974 batch In­dian For­eign Ser­vice (IFS) of­fi­cer who served as the per­ma­nent rep­re­sen­ta­tive of In­dia to the United Na­tions from 2009 to 2013, he was ap­pointed as one of the new min­is­ters in Prime Min­is­ter Modi’s Cabi­net on 2nd Septem­ber 2017. He shares his thoughts on his eventful in­nings in last nine months as the Hous­ing Min­is­ter. Edited ex­cerpts:

This was a land­mark year for In­dian real es­tate in­dus­try with sig­nif­i­cant rul­ings for the in­dus­try. In the post Rera sce­nario, with one year of GST and in­tro­duc­tion of In­sol­vency amend­ment, how do you think the real es­tate in­dus­try is fi­nally shap­ing up?

Rera came into be­ing as leg­is­la­tion at ap­prox­i­mately the same time as the In­sol­vency and Bank­ruptcy Code (IBC). Even though the In­sol­vency bill and the Rera have dif­fer­ent fo­cus, with one meant to res­cue the home­buyer while the other res­cue the com­pany, both at the end of the day are meant to pro­tect the in­ter­est of the home­buyer. We needed to amend the In­sol­vency bill to pro­vide pro­tec­tion to home­buyer by giv­ing them the sta­tus akin to that of ‘fi­nan­cial creditors.’ There is a com­mon cyn­i­cal view that the gov­ern­ment does noth­ing.

I will give you the list of things of what all we have done to re­ju­ve­nate the sec­tor. Apart from the RERA bill, Prime Min­is­ter Awas Yo­jana (PMAY), de­mon­e­ti­za­tion, look at the amount of relief given to home­buy­ers in dif­fer­ent forms such as in­creas­ing the car­pet area of houses in mid­dle in­come group ini­tially from 90 to 120 sq m and then from 120 to 150 sq m and from 150 to 200 sq m. The Gov­ern­ment has given in­fra­struc­ture sta­tus to af­ford­able hous­ing and brought down the rate of GST. The rate of GST ap­pli­ca­ble on houses con­structed un­der PMAY (Ur­ban) has been re­duced from 18% to 12% but the ef­fec­tive rate of GST re­duces to 8% af­ter tak­ing into ac­count one third abate­ment to­wards cost of land.

We can pro­vide the leg­is­la­tion but for peo­ple to im­ple­ment it ef­fec­tively, will al­ways take a lit­tle bit of time. Peo­ple’s par­tic­i­pa­tion is very im­por­tant. Swachch Bharat is now a peo­ple’s move­ment. PMAY is get­ting good re­sponse. For the smart cities pro­gramme, there was some re­luc­tance ini­tially. When I be­came min­is­ter, the al­lo­ca­tion was Rs 8,000 crores but by now it is Rs 30,000 cr and by De­cem­ber it will be Rs 50,000 crore. I had said that be­tween June and De­cem­ber you will see the phys­i­cal man­i­fes­ta­tion of it and we have been proved right. When we talk about smart city mis­sion, I in­vite you to go and see any one of the ten in­te­grated com­mand and con­trol cen­tre in Surat, New Raipur, Bhopal etc. It’s a sheer de­light to see th­ese – the scheme got an­nounced only in 2015, it started in 2016, it takes 18 months to set up a PMC and an­other 18 months for Spe­cial Pur­pose Ve­hi­cle (SPV) to be­come op­er­a­tional .But at the end of the day each of the schemes re­quires for its success a be­havioural change. Surat for in­stance has ev­ery­thing but peo­ple are still not wear­ing hel­mets.

You need to change that. You can build a toi­let but you are not hun­dred per­cent sure the per­son is go­ing to use it. But I don’t think it’s en­demic to us- you take the same peo­ple and put them in a for­eign en­vi­ron­ment and they will act dif­fer­ently but if 70% of peo­ple not us­ing hel­met, you also don’t want to use it. Our job is to set up the ecosys­tem- that’s very true for hous­ing as well. Ul­ti­mately th­ese are com­mer­cial trans­ac­tions be­tween two pri­vate par­ties. In this case, we have given power to the party which is ad­versely af­fected and that is the home­buyer.

Very of­ten you con­fer an authority or a power on some­one and the per­son doesn’t even re­alise the value of it. The IBC (Amend­ment) Or­di­nance, 2018 pro­vides for recog­nis­ing the home­buy­ers their sta­tus as fi­nan­cial creditors.

This would give them due rep­re­sen­ta­tion in the Com­mit­tee of Creditors (CoC) and make them an in­te­gral part of the de­ci­sion mak­ing process in case of In­sol­vency. Home­buy­ers would be able to in­voke Sec­tion 7 of the IBC against er­rant de­vel­op­ers.

We have lost six months af­ter the Rera chal­lenge, we are fac­ing the In­sol­vency de­bate where if you have de­clared in­sol­vency or bank­ruptcy, af­ter that you want to bid for that owned as­set at a con­ces­sional price – those are the is­sues now. The prac­tice will ul­ti­mately de­ter­mine what the con­tours are.

Rera has been one of the big­gest in­ter­ven­tions dur­ing your ten­ure. But how do you re­spond to pleas for amend­ments such as hav­ing the sanc­tion­ing au­thor­i­ties un­der its purview as builders al­lege that pri­mary rea­son for de­lay of projects is from au­thor­i­ties’ end?

First of all, lets un­der­stand what real es­tate in­dus­try is from my point of view. The real es­tate con­struc­tion in­dus­try is a very im­por­tant seg­ment of the econ­omy – it’s the sec­ond largest em­ployer in the coun­try. Hav­ing said that, I also want to say that if there is ‘stress’ in terms of as­sets be­ing in low sup­ply or as­sets be­ing in ten­sion, then the state gov­ern­ment, the cen­tral gov­ern­ment and the hous­ing min­is­ter have ev­ery rea­son to ad­dress that seg­ment of the econ­omy and the stress in that seg­ment, up­front.

But there have to be some qual­i­fiers – when you talk about land, one has to start by ac­knowl­edg­ing that land is a state sub­ject and state gov­ern­ments have to en­act their own pro­ce­dures and rules. Rera is a cen­tral leg­is­la­tion and the fact that for seventy years af­ter the in­de­pen­dence of coun­try, the sec­ond largest sec­tor of the econ­omy did not have a reg­u­la­tor is a very strong pointer to the prob­lems that ex­isted.

The fact is that prob­lems still ex­ist. You can­not re­solve a seventy year old prob­lem with one year of a new leg­is­la­tion. The real es­tate sec­tor whether we like it or not, was char­ac­terised and con­tin­ues to have large scale mal­prac­tices such as fraud­u­lent be­hav­iour against in­no­cent and un­sus­pect­ing home­buy­ers who have been duped by pro­mot­ers and de­vel­op­ers.

Nowhere in the world you have a sit­u­a­tion where some­body takes your money af­ter sign­ing a con­tract and then diverts the money else­where and we all know that the le­gal sys­tem and the crim­i­nal sys­tem take years to ad­dress the prob­lem. Quite sim­ply, Rera is today some­thing that was long over­due. Ev­ery­one who had a vested in­ter­est in the “sta­tus quo” or the sit­u­a­tion prior to Rera com­ing into be­ing was dead against it. So as soon as Rera was en­acted, the ex­pected hap­pened- a le­gal chal­lenge was mounted on all spu­ri­ous grounds such as it doesn’t cover ev­ery­thing un­der its am­bit etc. The Supreme Court di­rected the chal­lenge to the Mumbai high court. I was very sure that we will win the chal­lenge to Rera which we did. So my first re­sponse is Rera is only one year old and out of that one year, we lost six months in fight­ing the chal­lenge leg­is­la­tion. S

o for any­one to come and say we want to amend Rera, I want to be very clear where those sug­ges­tions are com­ing from. Bring­ing all au­thor­i­ties un­der Rera, means you are chang­ing the ba­sic fea­tures of the con­sti­tu­tion. I am a stu­dent of his­tory and I am al­ways in­ter­ested in who is writ­ing the his­tory – what are the mo­ti­va­tions and bi­ases of peo­ple mak­ing the rec­om­men­da­tion.

The un­scrupu­lous builder loved the pre-Rera sit­u­a­tion. The guys who have chal­lenged Rera are the very peo­ple who still haven’t come to terms with the ex­is­tence of Rera. Be­cause what can Rera do - first of all, Rera can en­sure that any project that starts from now, will re­quire 70% of the money col­lected from home­buy­ers to come into an es­crow ac­count and that can only be used for that project.

We are open to any sug­ges­tions to make Rera more ef­fec­tive - and we will go clearly set­ting out those amend­ments which may be re­quired when we are clear what the ben­e­fit is go­ing to be.

There is a tar­get to build 12 mil­lion houses in ur­ban ar­eas by 2022 as part of Hous­ing for all Mis­sion by 2022. How many houses have been sanc­tioned un­der PMAY (Ur­ban) till now? How many are un­der con­struc­tion and how many have been built so far?

We have to build about 11 or 12 mil­lion homes. We have al­ready sanc­tioned 4.75 mil­lion. Ev­ery month we have a de­mand for some­thing like 3-5 lakhs. By end of this month, we will have 5 mil­lion and by De­cem­ber 2018, we would have sanc­tioned 10 mil­lion. It’s not that there are any im­ped­i­ments but it’s all a ques­tion of re­sources. One of the things that we did for af­ford­able hous­ing apart from all the schemes listed in the four vec­tors of af­ford­able hous­ing, in situ slum re­ha­bil­i­ta­tion, credit linked sub­sidy scheme, ben­e­fi­ciary linked de­vel­op­ment is we re­alised that de­mand was so strong that we needed a huge amount of money. So we got an af­ford­able hous­ing fund worth Rs 60,000 crore. But the is­sue now is that this money will see us through only next six months. In the first month, we were able to uti­lize Rs 13,000 crore, and now go­ing at the rate of sanc­tion­ing 3-5 lakh homes ev­ery month, we would have ex­hausted the funds by Dec 2018.

The ti­tle of houses built un­der the scheme is in the name of woman in the fam­ily. What is the re­sponse and are peo­ple warm­ing up the idea?

In PMAY, the ti­tle has to be in the name of the woman of the house or co jointly. Peo­ple are warm­ing up to the idea and we need to em­power the women. It has to be that way and no other way.

If we talk about the flag­ship schemes of the Modi-led gov­ern­ment, whether it is Atal Mis­sion for Re­ju­ve­na­tion and Ur­ban Trans­for­ma­tion, Prad­han Mantri Awas Yo­jana, the fo­cus is to­wards ur­ban­i­sa­tion. Isn’t build­ing a counter mag­nate by de­vel­op­ing ru­ral in­fra­struc­ture a way to ease the bur­den on our cities?

That was the im­pres­sion. But the fact of the mat­ter is that there is a very strong ru­ral fo­cus now. If you look at the “un­even­ness” if I may call it of de­vel­op­ment in some ways the ru­ral ar­eas got left be­hind. How­ever, in bud­get 2018-19, you can see that there is a de­sire to put the ac­cel­er­a­tor on the ru­ral econ­omy, ru­ral hous­ing, Swachch Bharat mis­sion etc and sev­eral other schemes.

Talk­ing about Delhi seal­ing drive, you said there will be no tol­er­ance to­wards en­croach­ments and il­le­gal con­struc­tions in Delhi. At the same time, you said that seal­ing has to be an­chored on rule of law and doc­trine of com­mon sense. That’s a tight rope walk strad­dling the in­ter­est of the authority and the traders?

There is no tight rope walk. Seal­ing is an ac­tiv­ity di­rected by the Supreme Court. My job is mak­ing pol­icy. Pol­icy mak­ing be­longs to the Ex­ec­u­tive, which is the elected gov­ern­ment of the day. The mas­ter- plan is with DDA – so DDA has authority to amend the mas­ter­plan to the ex­tent that it does not vi­o­late the in­ter­ests. But if there are changes to be made to the ba­sic fea­tures, then the power to amend the mas­ter­plan is with the cen­tral gov­ern­ment and that’s where I come in. I am very clear that any en­croach­ment on gov­ern­ment land is il­le­gal. Nei­ther the traders, nor the RWAs will be al­lowed to do that. The fact is that en­croach­ments have been tak­ing place and there has been a cul­ture of im­punity or more specif­i­cally cor­rup­tion. Lo­cal au­thor­i­ties and those who have en­croached have col­luded and they have gone and oc­cu­pied gov­ern­ment land. But there will be zero tol­er­ance for en­croach­ment.

Now in so far as amend­ments to mas­ter­plan are con­cerned, in 2006- 7 when­ever the mas­ter­plan was de­vised, you couldn’t have an­tic­i­pated what the de­mo­graphic pres­sures on Delhi could be. Mas­ter­plan is not cast in stone. You have to go on amend­ing the mas­ter­plan so that Delhi starts re­claim­ing its past beauty rather than be­com­ing one big ur­ban sprawl and a mess. I can­not com­ment be­yond this as the mat­ter is sub ju­dice.

When can we ex­pect Na­tional Rental Pol­icy to be re­leased? Will rental homes sup­ple­ment the Mis­sion of Hous­ing for All?

You can ex­pect the Na­tional rental pol­icy to come out very soon. Yes, rental homes is an im­por­tant seg­ment and we are com­mit­ted to pro­mot­ing it in a big way and have been work­ing upon it. Cur­rently there are a lot of homes ly­ing va­cant as land­lords are ap­pre­hen­sive to rent them out to ten­ants for a va­ri­ety of rea­sons such as the com­mer­cial con­tract not giv­ing ad­e­quate cov­er­age and pro­tec­tion. I can as­sure you that a new pol­icy will come out sooner than ex­pected.

You have said some­where that we must have tall build­ings in the city and have been a pro­po­nent of higher FAR. True?

I also said some­where that our town plan­ners are liv­ing in bul­lock cart age. I feel peo­ple have been vic­tims of bad pol­icy. Who cre­ated the slums? They did not cre­ate the slums rather it was the re­sult of poor plan­ning. There is no doubt that you need higher FAR. Mumbai and Shang­hai were at the same level and look at where Shang­hai is today. Pop­u­la­tion is in­creas­ing and we need taller build­ings in the city to ac­count for in­creas­ing pop­u­la­tion.


Hardeep Singh Puri

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