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Why is Delhi government dragging its feet on land pooling policy?

10,000 property buyers face an uncertain future and Rs 30,000 crore remains locked up because of Delhi govt’s inability to take a stand on the land pooling policy

real estate Updated: Feb 13, 2016 19:38 IST
The land pooling policy has the potential to create 25 lakh to 30 lakh housing units in Delhi.
The land pooling policy has the potential to create 25 lakh to 30 lakh housing units in Delhi. (Sunil Ghosh/HT Photo)

The Aam Admi Party (AAP) has an important question to answer. Why, when it is trying to fast track the regularisation of about 1,200 unauthorised colonies in Delhi, is the party refusing to take a clear stand on the land pooling policy (LPP) which has the potential to create 25 lakh to 30 lakh housing units with modern facilities in Delhi? The sad truth is that thousands of buyers are also in the danger of losing their money as unscrupulous parties are selling them land and properties as part of LPP.

According to a rough estimate drawn up after discussions with several stakeholders in Delhi Development Authority’s (DDA) LPP, HT Estates has reason to believe that various corporate houses, developers and individual buyers have in all probability spent Rs 30,000 crore on buying land from farmers in the past few years. This huge corpus remains locked up due to lack of clarity on the part of the Delhi government causing severe financial inconvenience to the parties concerned.

Another matter that has come to light is that when the mandatory provisions of the LPP have not been completed, builders or brokers can in no way advertise projects related to it.

Under the LPP, land parcels owned by individuals or groups are legally consolidated by transfer of ownership rights to the designated land pooling agency. The agency then transfers ownership of part of the land back to the landowners for developing such areas.

Some developers and land owning groups, it is learnt, have also been luring homebuyers to invest in apartments in land pooling zones. When the mandatory provisions of the LPP have not been completed, builders and brokers can in no way launch and advertise projects related to it. Till now, according to another estimate, more than 10,000 homebuyers have already paid the booking amount, ranging between Rs10 lakh and Rs 20 lakh, for apartments in agricultural areas the land use of which has yet to be changed to residential.

Experts say that land in seven LLP zones – L, J, K1, K2, P1, P2, N – measures 75,000 acres, out of which, if a conservative view is taken, 25% to 30% (18,000 to 22,000 acres) land has already been bought by several corporate houses, developers and individual buyers from farmers. If land cost is roughly calculated at Rs1.5 crore per acre, the money to purchase land comes to around `27,000 to `35,000 crore.

“The land pooling policy files have been lying with the Delhi government for more than six months but no decision has been taken on the matter. This is the file which contains Delhi’s future development plan, with costs estimated at more than Rs 1 lakh crore for housing for more than 20 lakh families in highly regularised modern group housing colonies,” says Sudhir Dabas from Saffron-Land Realty Ventures Private Limited, a company which provides consultancy on land pooling.

It is “unfortunate,” Dabas says, that while the economy is “begging for more inflow of investment in key sectors, about `30,000 crore of investor money is held up in land pooling schemes. The funds could have otherwise generated a huge inflow of foreign and indigenous investment in the otherwise morbid real estate sector. The Delhi government must clear files or give reasons for its laxity.”

Questioning the “inordinate delay” by the Delhi government, Ramesh Menon, director, Certes Realty, says not implementing the operationalisation mechanism of land pooling means a few “unscrupulous elements have got the opportunity to market apartments, which have no legal sanction whatsoever. The law which regulates raising of money from public entities, does not allow multi-state cooperative housing societies and welfare societies to collect money from the public for the purpose of real estate activities.”

Many experts say that most selling agencies haven’t undertaken any due-diligence on these projects, and are myopically marketing these projects overseas, too, for selfish gains. These brokerage firms have endangered the hard earned money of unsuspecting consumers, who are most likely to lose not just the interest on their investment, but also the capital in many cases.

“Many developers are advertising even facilities, amenities and design of apartment projects even though the mandatory provisions of the LPP are yet to be completed. Most seasoned investors have stayed away so the buyers at the bottom of the pyramid are being targeted,” says Menon.

When the urban development ministry gave its nod to operational guidelines for LPP in May last year, lot of people thought the LLP would very soon become a reality. The next step would have entailed the conversion of 95 rural villages to urban villages under Section 507 of the Delhi Municipal Corporation Act (DMCA) 1957.

According to Section 507 (DMCA), “The Corporation with the previous approval of the Government, may, by notification in the Official Gazette, declare that any portion of the rural areas shall cease to be included therein and upon the issue of such notification that portion shall be included in and form part of the urban areas.”

Once the rural villages will become urban areas, Section 12 of DDA Act directs that these villages should be converted into development areas.

“Once these two steps are completed by the Delhi government, DDA can invite land owning agencies to surrender land to the Authority,” says a senior officer from the DDA .

When HT Estates wrote to Manish Sisodia, Delhi deputy chief minister, with a copy to the Arvind Kejriwal, chief minister, asking for reasons for the delay in notification for the conversion of 95 rural villages to urban areas, the mail was forwarded to special secretary urban development by GK Madhav, OSD to deputy chief minister, keeping this correspondent in the loop with a comment, “Please find the mail here to look into the matter. ATR/Status may please be sent to applicant.” Repeated attempts by this correspondent to get in touch with SS Gill, special secretary, urban development, who is associated with the LPP, proved futile as Gill disconnected his mobile phone when he was asked to clarify the status of the policy.