Mohali developers decry govt delay in clearing EDC policy

In the works for two months, the policy to allow developers to pay external development charges in instalments is still hanging fire

Real estate developers eyeing projects in Mohali are a harried lot amid the delay by the Punjab housing and urban development department to notify the policy allowing them to pay external development charges (EDC) in instalments.

In August this year, a five-member committee was constituted under the chairmanship of Sagar Setia, chief administrator of Greater Ludhiana Area Development Authority (GLADA) to formulate a policy in this regard. (HT File)

Under Section 5 of the Punjab Apartment and Property Regulation Act (PAPRA), 1995, EDC and licence fee is to be deposited by builders. It is calculated on the basis of area of land to be developed. Delay in payment invites 10% interest and 3% penalty.

The funds collected are to be spent on the development of external services, including water supply, sewerage system and electricity grid.

In Mohali, as many as 29 developers owe the Greater Mohali Area Development Authority (GMADA) ₹900 crore on account of EDC. Unable to pay the amount in lump sum, they have, for years, been seeking relief from Punjab government to pay the charges in instalments.

In August this year, a five-member committee was constituted under the chairmanship of Sagar Setia, chief administrator of Greater Ludhiana Area Development Authority (GLADA) to formulate a policy in this regard.

After several rounds of meetings, the committee finalised the policy, but it has yet to be notified. Resultantly, the realty projects remain stalled.

“The real estate sector in Mohali has been severely impacted, with projects worth ₹35,000 crore being stalled due to government’s delay. The builders are ready to pay the EDC amount in instalment, but authorities’ lackadaisical approach is delaying fund generation,” said Jagjit Singh Majha, president of the Confederation of Real Estate Developers Association of India, Punjab (CREDAI).

On the government’s part, Anurag Verma, chief secretary-cum-administrative secretary, housing and urban development, Punjab, said they were in the process of finalising the policy and hope to complete it soon.

Developers have also accused GMADA of violating provisions of PAPRA by not utilising the EDC already paid.

The policy for utilisation of EDC mandates GMADA to use the funds collected for the project as the first priority, with any other common infrastructure development being the second priority. GMADA was also supposed to open a separate account for each project’s EDC utilisation, establish an advisory committee with promoters as members, and prepare an action plan for the projects. However, the authority has failed to fulfil these requirements, say developers.

Parveen Kansal, chief managing director of Chandigarh Royale City, Zirakpur, criticised GMADA for breaching the contract with promoters: “GMADA has not fulfilled its obligations under PAPRA and the agreement. Any money collected from promoters on account of EDC has been diverted to other works that have no connection with said projects.”