Behind Haryana land boom, the Midas touch of Hooda

[rsaraogi1]

In today's edition national daily "The Hindu" revaled the nexus of politician & bulilders for land scam in Haryana and suffering of middle class in their fron page story "Behind Haryana land boom, the Midas touch of Hooda".

Regards,
Rajesh K Saraogi

http://www.thehindu.com/news/national/behind-haryana-land-boom-the-midas-touch-of-hooda/article4048394.ece?homepage=true

Robert Vadra may be the most talked about property developer in Haryana but the emergence of links between the man who sold Sonia Gandhi’s son-in-law his first plot of land and Haryana Chief Minister Bhupinder Singh Hooda has shone a spotlight on the crucial role played by the Congress-run government in turning realty in the State into a business worth thousands of crores of rupees.

Records of all licences granted by the Haryana government from 1981 till September 27, 2012, tell a compelling story — a story of political alchemy in which farmland turns into gold for all those fortunate enough to acquire acreage and the permission required to undertake commercial development on it.

In the 23 years preceding Mr. Hooda’s rise to power, successive Chief Ministers granted licences for a total of just 8,550.32 acres. But during the seven-and-a-half years he has been Chief Minister, licences for the development of a staggering 20,549.63 acres of land have been granted — an increase of nearly 150 per cent.

Mr. Hooda has already come under media scrutiny following his decision to transfer IAS whistleblower Ashok Khemka from the State’s land registration office shortly after he began a probe into alleged irregularities in property dealings involving real estate major DLF and Mr. Vadra.

Last week, Business Standard reported that the 3.53-acre plot of land in Manesar whose purchase in January 2008 marked the entry of Mr. Vadra into the real estate business belonged to a company whose owner, Satyanand Yajee, is a long-standing associate of Mr. Hooda. If the regulatory filings made by Mr. Vadra’s company, Skylight Hospitality, are correct, Mr. Yajee was a benevolent seller. He did not cash the cheque he received from Mr. Vadra until after the latter obtained a licence changing the plot’s land use to commercial and sold it to DLF for a hefty profit — something no property dealer would normally do.

Congress spokespersons were at pains to deny favouritism by the State government in the speedy grant of the Manesar licence to Mr. Vadra and they are correct. Skylight is not the only beneficiary of official help: It turns out that Mr. Hooda, who took office in March 2005, has allocated licences to over 350 real estate firms of all sizes, most of which were unknown or had no experience whatsoever in property development.

Of the total 20,549.63 acres that were licensed, 7,733.68 acres were in Gurgaon, 2,266.91 acres in Faridabad and 10,569.37 acres in the rest of Haryana. Commercial land use accounted for 984.83 acres, group housing 5,867.99 acres, and plots 13,303.51 acres. Surprisingly, Information Technology projects accounted for a mere 409.21 acres.

A questionnaire emailed to the Chief Minister’s office seeking information on Mr. Hooda’s land allotment policy went unanswered till the time of going to press.

Rise of BPTP

Countrywide Promoters (BPTP) with roughly 1,635 acres was the single largest beneficiary, followed by Ansals (1,540 acres), Intime Promoters (1055.84 acres), Omaxe (903 acres), Unitech (830 acres), Parsvnath (716.56 acres), Ireo (651 acres), Vatika (631 acres), DLF (568 acres), Emaar-MGF (514 acres), Vipul (214 acres), Sonika Properties (Rohtak) (381 acres), Ambience (318 acres), Ramprastha (298 acres), Bestech (208 acres), Uddar Gagan Properties (Rohtak) (229 acres) and Baderwals (105 acres). Sonika and Uddar Gagan are subsidiaries of the Suncity Group owned by Zee.

Builders like BPTP, Omaxe, and Parsvnath have made huge gains in Haryana since 2005. Ireo, which belongs to a close relative of an influential BJP politician, and Bestech, which is owned by one Dharmendra Bhandari, have also become big brands in Haryana overnight. Countrywide Promoters (BPTP), incorporated as Rainbow Promoters Pvt Ltd in 1996 by Kabul Chawla, was an unknown builder till 2005. From a Najafgarh Road residential address, Mr Chawla now lives on Delhi’s ultra plush Amrita Shergill Marg in a property said to be valued in the region of Rs. 300 crore.

Baderwals, along with DLF, is also now in the public eye for having given unsecured loans to Mr. Vadra, according to publicly available balance sheets of his companies.

Other companies like Microtek (which makes inverters) and DD Motors (which owns several Maruti showrooms in Delhi) appear to have obtained licences without any expertise in construction. According to an amendment to an April 24, 2007 memo issued the very next day by the Haryana Town and Country Planning Department (TCP), a reputed coloniser eligible for the grant of licence is “one who has already obtained licence under the Haryana Development & Regulation of Urban Areas Act, 1975 for setting up of a colony and in case of collaboration agreement with a private developer not being licensee of the Department and who is applying for obtaining the licence for the first time.” This amendment helped to widen the eligibility criteria, ensuring that lack of construction expertise would not be a deterrent in obtaining licences.

Violations overlooked

The data further reveals that the Hooda government had no problem renewing many of these licences despite builders failing to complete their work on time as stipulated. This allowed non-performing builders to profiteer by squatting on a precious resource at the cost of the end-user. Other anomalies in licence allocation abound, as is illustrated by the award of 14.793 acres of disputed land in sector 106 of Gurgaon to BPTP, allotted as per licence LC-1017A – No 18 on February 2, 2008. Its owner, Surinder Pal Beniwal had filed a complaint with the Haryana TCP against BPTP’s Countrywide Promoters on March 20, 2007, over non-payment of the agreed sale amount. In response, the TCP department wrote to Countrywide Promoters on April 23, 2007 that “the licence will be considered on the land free from all encumbrances.” Despite this or the legal dispute that followed, BPTP’s licence was first awarded and then even renewed, overlooking the fact that it has still not obtained possession of the land or begun any construction activity.

Licensees like Juventus, Selene and Mariana Infrastructure all have a common Connaught Place address and are linked to the publicly listed Indiabulls Group, which has a stated net worth of Rs. 19,320 crore and is said to be backed by powerful Congress politicians. The CEO of Indiabulls Real Estate Narendra Gehlaut is the son of Krishna Gehlaut, who was earlier a Haryana minister in the Congress government. Narendra Gehlaut is married to Congress MP Jyoti Mirdha, whose sister Shweta is married to Deepinder Hooda, the son of the Haryana Chief Minister. Similarly, Ramprastha Builders has 22 affiliate companies of which 4-5 (Ramprastha Greens, Ramprastha Estates, Ramprastha Buildwell, etc) have procured licences.

No room for middle class

On December 19, 2006 — less than two years into Mr. Hooda’s first stint as Chief Minister — the Haryana government which had earlier discontinued the grant of licences for cooperative housing societies in high and medium potential zones discontinued cooperative housing schemes even in low potential zones.

Another memo dated September 15, 2008, stated, “The licence application of only those Registered Cooperative House Building Societies will be considered for grant of licence who have a collaboration with the builders/developers having the financial capacity to undertake the development and technical expertise in development of residential colonies.” Together, these memos ensured that all cooperative housing had to be done in collaboration with a builder, wiping out the cost advantage associated with this category.

Between 2006-9, the Haryana government also announced policies for affordable housing to be priced at Rs. 4 lakh, Rs. 12.5 lakh, Rs. 14 lakh and Rs. 16 lakh for different categories. However, according to the Gurgaon Citizens Council (GCC), official responses to RTI queries show that though 10 leading builders were licensed 200 acres of land in Gurgaon alone to build 40,000 dwelling units, till date not a single apartment has been handed over to the end-user. The GCC alleges that this non-construction and change of land-use to general category group housing in these areas have resulted in a benefit of roughly Rs. 4,000 crore to these builders. They have demanded that the Haryana government cancel these licences, launch a probe against corrupt government officials and build these low-cost dwelling units itself through a government agency under the Gurgaon-Manesar Master Plan 2021.

The GCC has further alleged a loss of roughly Rs. 8,000 crore to the State exchequer and corresponding gain to private builders by changing age-old norms to allow the Haryana Urban Development Authority (HUDA) to acquire land directly from farmers for construction of sector roads. Earlier, builders would acquire the land directly and hand it over to HUDA free of charge along with External Development Charges (EDC) collected from buyers. Though Sectors 1-58 were developed like this, land for roads for Sectors 58-115 was acquired directly by HUDA, resulting in lower gains for farmers from whom the land was procured, while absolving builders of their responsibility of providing land for roads free of charge to the State government.

Those operating in the real estate market in Haryana further point to the neglect of the IT sector which got the lowest share of land in Mr. Hooda’s tenure, despite it being an employment generator, owing to lower margins and, therefore, lower incentives for the builder lobby to invest.

The State has also released 3 Master Plans for Gurgaon in 7 years — 2021, 2025 and 2031 — which the Opposition Indian National Lok Dal (INLD) has alleged was to change land use to favour key individuals and builders. Additionally, while earlier, licences for change of land use were restricted to Gurgaon, Faridabad and Sonepat, under Mr. Hooda, the State has allocated licences in almost every district. This rapid construction has come at the cost of basic amenities like power, water, roads, regulated traffic and adequate policing for Haryana’s burgeoning population. INLD leader Om Prakash Chautala has demanded a freeze on award of any new building licences under the proposed Master Plan for 2031 until the existing population is provided this basic infrastructure.

Illegal extraction of groundwater

Builders, who receive environmental clearance for construction of colonies on condition that there will be no impact on water resources, have been drawing groundwater for construction purposes in blatant violation of their licence conditions under the very nose of the Gurgaon administration. Following a High Court Order, a show-cause notice for illegal extraction of groundwater for construction purposes was finally served to a majority of builders on August 14, 2012 by the Haryana TCP.

Inexplicably, despite ever widening infrastructure gaps amidst rapid construction activity, the Haryana government has not used the over Rs. 10,000 crore it collected as EDC from builders (who passed the charge on to the end consumer) in the past half decade for creation of basic amenities.

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BPTP, the biggest beneficiary of the Haryana government’s land licensing regime, is also the target of the largest number of complaints from customers who accuse the builder of violating official policies and reneging on its commitments.

According to Manoj Pandey of Destiny Real Estate broking firm, once BPTP’s registered broker, BPTP has since 2004 booked tens of thousands of flats across its massive land holding, collecting crores of rupees from would-be homeowners, but has so far successfully completed and registered only a very small fraction.

In addition, the location of plots has also been changed at random, with customers pushed into less developed and therefore less lucrative zones, with diminished plot sizes. One customer, Kanak Lal Mishra, who deposited Rs. 4 lakh by cheque with BPTP for advance registration of a 250 sq yd plot in Faridabad in September 2005, was allotted Plot No X10-04 measuring 302 sq yds at Parklands, Faridabad vide a BPTP Allotment cum Demand Letter dated July 4, 2008. “We hereby call upon you to pay a sum of Rs. 8,07,434 by 19.07. 2008 and the balance amount of Rs. 8,07,434 by 3.08.2008 failing which, it shall be assumed as you are not interested in the allotment.”

The letter goes on to state: “Timely remittance of the payments due is the essence of the transaction/agreement failing which the company shall be entitled to cancel the allotment without any further notice and reference to you and you shall be left with no right title, interest in the said property. As regards the interest on delayed payments, the same is payable at 18 per cent p.a.”

In a letter dated 12 April 2008, BPTP again wrote: “Please note that due to changes in the layout plan, we have allotted you an alternate plot. The plot number now allotted to you is LM2-45C, measuring about 258 sq yds, Parklands, Faridabad.”

Mr. Pandey told The Hindu that BPTP’s agreement document referred to in the letter is very complex, running into roughly 500 pages, which ensures that neither the broker nor the client can ascertain its legal implications before making their decision to invest. “BPTP made my client Mishra pay for 302 sq yd when he had applied for just 250 sq yd, changed the plot and the size to 258 sq yd without refunding the extra money, has even taken enhanced External Development Charges (EDC) — increased more than double from Rs. 1,024/sq yd to Rs. 2,400/sq/yd — and has still not registered the property, which is now located in a jungle where there is no development activity as yet