State cannot waive interest for defaulting builders: Mahana

Realtors’ body Credai has been demanding waiver of interest for builders who have failed to clear land dues so they can finish housing projects

Uttar Pradesh industry minister Satish Mahana on Friday said the government cannot waive off interest imposed on builders who have defaulted on payment for land dues.

Minister of industrial development Satish Mahana (right) holds monthly review meetings of the Noida, Greater Noida and Yamuna Expressway authorities to monitor their functioning and the progress on all ongoing projects. (HT file photo)

The Confederation of Real Estate Developers Association of India (Credai), a realtors’ body, has been demanding for waiver of interest imposed on builders, who have failed to clear land dues and finish housing projects.

The Noida authority is struggling to recover around ₹11,000 crore from 94 builders, the Greater Noida needs to recover ₹7,200 crore against 203 housing projects and the Yamuna Expressway authority has failed to recover ₹3,000 crore land dues from 42 builders.

The three authorities had allotted housing land in 2009-10 after the builders deposited 10% of the total land cost. They were supposed to deposit the remaining 90% in instalments. Developers have cited economic slowdown in the realty sector as reason for their inability to clear this amount in land dues.

Builders argue that if the state government waives off the interest component then many struck housing projects can be revived because the land dues amount will come down.

“How can we waive off the interest of the builders, who could not pay up as per the plan. If we will waive the interest then the state government will suffer a huge loss. We cannot take a step that affects the financial health of the government; we could be accused of favouritism,” industries minister Satish Mahana told Hindustan Times.

The builders also argue that the government should waive the interest because housing construction work was affected by court cases and this caused them huge loss.

Gitambar Anand, CMD of ATS Builders and president of Credai said, “Our demand is that if Allahabad high court, Supreme Court or National Green Tribunal cases have affected the construction then the government should have sympathy with the builders. The government should rationalize the interest component.”

The minister, however, seemed unimpressed by such arguments.

“There are separate committees to look into cases where genuine issues pertaining to housing land prevail. If the construction was disrupted due to a court case on acquired land then the committee will look into applications,” Mahana said.