I refer here to the current situation arising out of the Allahabad high court's quashing of land acquisitions by the Uttar Pradesh government and its consequence on thousands of consumers who have paid huge amounts to the builders who acquired the land and promised to provide them houses.
It's a bit early to estimate the total number of consumers who will eventually be affected, but it could well run into a few lakhs, depending on how many such acquisitions are going to be set aside.
Given the agony of those people who have invested in these projects in the hope of owning a house of their own some day, the magnitude of the problem and its possible consequences on the housing sector and even the banking sector, the
central government needs to take immediate pro-active steps.
The general feeling among the citizens today is that it is only the law that will save them and not the administration, which is only out to loot. What has happened in Noida Extension has only reinforced this view. It is, therefore, imperative that the Centre take certain urgent steps to mitigate the suffering of the affected consumers.
Many of them, for example, want to discontinue repayment of the loan taken from their banks. And in their present state of mind, they are unwilling to listen to the fact that such a step would impact their credit rating and adversely affect all their future borrowings.
Their only logic is that their losses would double if they repaid the loan, without getting the house.
"Let the bank, which did the due diligence, collect the money from the builders," they argue. I feel that this is where the government needs to intervene urgently.
May be the banks can be asked to reduce considerably the rate of interest on these loans and also readjust the repayment schedule.
The government must remember that this is an unprecedented crisis and there are lakhs of distressed consumers. Secondly, the government needs to give these consumers the confidence that they will either get the flat or their money.
As of now, I see two possible scenarios:
(a) The farmers will sell their land at a decent price to a builder or the UP government and the consumers will eventually get their flats, but at a considerably higher price (most
(b) The farmers will decide against selling their land and so the flats will not come up. The consumers will wage a long legal battle to get back their money from the builders.
If it is the former, the consumers will at least get their flats and can seek the intervention of the law to force the
Greater NOIDA Authority to absorb additional land costs and get the builder to pay for any other escalation in costs due to delays. After all the builder does not come out lily white in this whole episode.
If the flats do not come up, then in addition to the refund (with interest) from the builders, the UP government should make good all other consequential losses suffered by the consumers. Hopefully, the law will stand by the consumer in all this.
Suresh Kumar: I had taken a R6 lakh loan towards a flat in NOIDA extension and paid the builder, who is now not giving any assurance on the money or the flat. So should I stop payment of EMIs to my bank?
Answer: Kindly do not stop the repayment. Instead, contact a credit counselling centre and ask them for help. I would also suggest that all housing associations write to the union finance minister seeking his urgent intervention in the matter.