Builders may have to pay full EDC for occupancy permits
A senior GMDA official, requesting anonymity, said the proposed method of recovering EDC would hold builders, who often default on or delay EDC payments, to account.Updated: May 04, 2019, 02:08 IST
The Gurugram Metropolitan Development Authority (GMDA) has revised its system of recovering external development costs (EDC) from realty estate developers. These costs will now be recovered in totality before granting them occupancy certificates.
According to the authority’s new proposal, which has been conveyed to the Haryana town and country planning department (DTCP), 10% EDC will be recovered at the time of issuing the change of land use (CLU) permit, 40% at the time of approving the developer’s building plan, and the remaining 50% at the time of providing the project’s occupancy certificate.
A senior GMDA official, requesting anonymity, said the proposed method of recovering EDC would hold builders, who often default on or delay EDC payments, to account.
“At the moment, because only 10% EDC is recovered before providing occupancy certificate, builders tend to take many years to pay us the remaining amount straining our funds,” the official said, adding that the move will help mitigate revenue losses.
In the last five years, the quantum of outstanding EDCs has risen by almost 120%, according to a recent RTI application filed by city-based activist Aseem Takyar. From Rs 3,427 crore in 2014, the outstanding EDC amount stood at Rs 7,549 crore in March 2019 for Gurugram alone. As of April, developers continue to delay this payment for at least 246 real estate projects.
The GMDA is looking at EDC as its primary source of revenue and plans to invest over ₹500 crore from EDC funds to develop public infrastructure in the current financial year. However, due to non-payment of EDC, the city is yet to receive important public utilities.
Gurgaon Member of Parliament Rao Inderjit Singh, and officials, including MCG commissioner Yashpal Yadav, have publicly said that failure to collect EDC has severely hampered Gurugram’s growth.
GMDA chief executive officer V Umashankar wrote to principal secretary (town and country planning) Apoorv Kumar Singh seeking comments on this proposal on April 8. A copy of the letter is with Hindustan Times.
The initial proposal for the same was sent to Haryana DTCP on January 9, but the GMDA is yet received a response.
“Approval of building plans and grant of occupancy certificates have been kept pending awaiting a decision on the proposal. To prevent further delay, however, the GMDA will be proceeding with their proposed system until they receive a response,” Umashankar wrote in the letter.
This development, Umashankar’s letter stated, is only the latest step in the cash-strapped GMDA’s attempt to make up for the deficit in EDC receipts.
“EDC receipts are short of the expenditures made under this head so far… The significant deficit is severely impeding the fulfilment of development obligations,” wrote Umashankar. These development obligations include establishing roads, sewerage, power lines and other ‘external infrastructure’ which are essential public utilities.
Speaking to HT, Umashankar said, “In Gurugram’s new sectors, that is 58 to 115, the process of land acquisition by developers is almost complete and external development services are being provided in steps. Therefore, full EDC recovery before issuing occupancy certificates is being insisted on.”