In an effort to address the problem of stalled real estate projects, Forum for People's Collective Efforts (FPCE) President Abhay Upadhyay has suggested lifetime bans for the responsible developers. Proposing nationwide audits to identify such projects, Upadhyay recommends removing the original promoters from their roles and conducting forensic audits to trace fund diversions. The suggestions, aimed at safeguarding homebuyers' interests, were presented to Amitabh Kant, Chairman of the Committee on Stalled Projects. The issue remains particularly severe in Delhi-NCR, one of India's largest property markets.
In a recent move to rectify the nationwide issue of stalled real estate projects, Abhay Upadhyay, president of the Forum for People's Collective Efforts (FPCE), has presented a set of proposals to Amitabh Kant, Chairman of the Committee on Stalled Projects. The suggested measures aim at the comprehensive revival and completion of these projects.
The FPCE has suggested lifetime bans for developers of stalled real estate projects and recommended forensic audits to identify potential fund diversions that may have rendered projects financially unviable. These proposals were presented during the Committee's second meeting on May 8, dedicated to addressing the ongoing issue of stalled projects.
The Union Housing and Urban Affairs Ministry had previously established a 14-member committee in March, led by Amitabh Kant, former CEO of NITI Aayog, to investigate the stalled real estate projects and suggest potential solutions. The committee is expected to deliver a report within six months of their first meeting.
The FPCE president proposed a nationwide exercise to identify projects that have been delayed for over five years or are completely halted. He recommended that these projects be categorised based on financial viability and the causes of the stall. Upadhyay further suggested that project promoters should be entirely removed from their roles, especially for projects that have been long-delayed or abandoned.
He emphasized that the promoters of such projects should be permanently prohibited from participating in any real estate ventures that include the sale of dwelling units. In cases where the promoters operate through different companies or brands, those entities should be stripped of their assets and merged with the stalled projects.
Upadhyay proposed forensic audits for financially unviable projects to ascertain whether the promoters had diverted funds. If found guilty, their personal assets should be liquidated to supplement the project funds. Furthermore, he suggested exploring other resource augmentation possibilities, such as permitting additional construction areas.
For projects deemed financially unviable even after exhausting all other resources, Upadhyay suggested creating a separate corpus fund to provide financial grants, thus avoiding extra burdens on homebuyers. He also proposed utilizing a separate corpus from the SWAMIH fund for working capital needs, especially for financially viable projects.
The cause of delay for projects stalled due to non-financial reasons should be identified, and solutions should be sought through liaison with governments, departments, and concerned authorities.
Upadhyay underscored the necessity of ensuring that these project promoters are not granted immunity from any ongoing legal proceedings. The Indian real estate sector has been battling the issue of stalled projects for years, causing significant distress to homebuyers.
The issue is particularly severe in Delhi-NCR, one of the country's largest property markets, with several big companies like Jaypee Infratech, Unitech, Amrapali, and the 3C Company having projects stalled. In addition, many builders have defaulted on their project delivery promises, forcing homebuyers to resort to legal avenues, including the National Company Law Tribunal (NCLT), to safeguard their investments.
In conclusion, FPCE's comprehensive measures aim to curb the issue of stalled real estate projects and safeguard the interests of homebuyers. The success of these proposals will largely depend on their efficient implementation and the willingness of various stakeholders to cooperate towards resolving this widespread issue.
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