“Developers show reluctance in accepting the Uttar Pradesh government’s relief package, posing challenges to the revival of stalled projects and addressing pending dues”
A month and a half after the rollout of the Uttar Pradesh government’s rehabilitation package for real estate developers, the response has been lukewarm. Out of the 57 developers eligible for the package, only 13 have submitted consent letters to the Noida Authority, agreeing to the terms.
The package, aimed at reviving 2.4 lakh stalled projects, incorporates recommendations from the Amitabh Kant committee. It includes a two-year ‘zero period’ waiver of penalties and interests incurred during the Covid pandemic, reducing developers’ outstanding dues. However, it also imposes a time-bound repayment schedule for recalculated dues.
Top companies with significant dues, such as Aims Max Gardenia (Rs 1,600 crore), Omaxe (Rs 490 crore), and Pan Realtors (Rs 380 crore), have not attended Noida Authority meetings nor applied for dues rescheduling.
Noida CEO Lokesh M stated that the authority would issue “final” letters to developers, asking for their decision. If all 57 developers accept the package terms, approximately 32,000 homebuyers awaiting registry or possession will benefit, with Noida expecting a repayment pipeline of Rs 8,000 crore.
For developers not applying for the package, there will be no recalculation of dues with the zero-period waiver. They will be required to pay the entire amount, and Noida Authority may take actions like issuing recovery certificates and sealing properties.
The government’s guidelines, issued on December 21, aimed to revive stalled projects by recalculating dues after deducting interest and penal interest from April 1, 2020, to March 31, 2022. Developers were assured of a 21% rebate during a meeting on January 5.
While seven developers initially applied for the package on January 23, more have come forward since. However, developers express dissatisfaction with the recalculation of dues, particularly regarding the consideration of the National Green Tribunal’s zero period. Some argue that if this period is acknowledged, a significant portion of their arrears would be eliminated.
The lukewarm response raises concerns about the effectiveness of the relief package and the challenges faced by developers in complying with the terms outlined by the government.