Policy On Coop. Group Housing Societies; DDA Dumping the Interest of Middle Class:

Posted on Wednesday, July 20, 2005 at - Post Comment

DDA VC has said in a press conference that now onwards the Co-op Group Housing Societies in Delhi will have to build as many flats for the economic weaker section of the society as many they are building for the regular members of the society. For this, additional land would be allotted to the societies.

This is a policy response to a direction of Delhi High Court in a court case in the name of  Yogi Raj Krishna Vs DDA. Before coming to the details let me summarize the story based on the news paper reports from time to time so that the whole context is understandable.

What is the method of allotting Land to the Cooperative Group Housing Societies(CGHS) in Delhi?

The CGHS are formed and registered with the Registrar Cooperative Societies, Delhi Government, which in turn recommends them to the Delhi Development Authority for allotment of land in Delhi for residential purpose. This allotment is based on seniority of the societies. All societies, waiting for allotment, were registered up to year 1985.

What is the story behind 135 societies which is published in the newspapers always?

The Registrar cooperative societies(RCS) had recommended 135 societies an year back or so to DDA for allotment of land. There are about 17,000 members registered with these societies who would be getting flat once allotment is done and construction is completed. Once these societies were referred to DDA, DDA found anomalies in the list and many of the members and societies were non existing. DDA referred the list back to the RCS for re verification.

In between a society names YogiRaj CGHS went to the High Court challenging the action of DDA.

What was the initial response of High Court?

The High Court took a serious view and pointed out that there are two serious aberrations which have crept into the scheme.

(a)   Builders have entered into the scheme who are throwing away the original members and bringing their own dummy members in the societies. Thus, societies have been captured by the builders who are cornering the subsidies given by the Government. It may be noted that the land allotted by the Government to the societies is at subsidized rate which is far below than the market rate,

(b)   The builders are then selling the built up flats in the open market at market rate which ranges between 30-60 lakhs.

Thus high court was furious that the scheme has failed to benefit the intended beneficiaries i.e. the original members or the middle class of the society.

What was the direction of the High Court then?

The High Court directed that the Government of India and DDA may frame a policy in a time bound manner which ensures that either the plots are sold to the societies at the market price and the earnings go to the house building for the weaker sections or the GOI must ensure that the builders are kept out of the societies and benefit goes to the middle class. It also directed the Registrar Cooperative societies to verify the membership stringently so that wrong elements don’t get the benefit of a government scheme.

What was the response of RCS and GOI and DDA?

RCS decided a criteria for verification and published the notice in the Hindustan Times in December 2004 asking all the 135 societies to get the verification done. The criteria was informed to the court and the court was satisfied. DDA and MOUD came up with a policy which has the prime component a policy statement that now onwards the land would be allotted to the CGHS  with the direction that they will have to built equal number of flats for the economically weaker section of the society for which extra land would be allotted to societies.

What is the response of the societies to the process of verification?

 According to the Times of India report, in the first chance only 180 members out of 20,000 came forward for verification. The others didn’t turn up. The Delhi Govt. again gave a fresh opportunity in which about 7000, papers have been filed. God knows how many are correct. Thus it means majority of the members were fraud and most of the societies have been taken over by the builders. Thus, it means that a business of 17,000 X 30 lakh = Rs. 5,100 crore would have gone into the hands of the builders if DDA had allotted the land as per the recommendations of RCS.

Seeing the fraud exposed, one of the society has gone to the High Court by filing another writ petition. The society challenged the process of verification by the RCS. Now the same bench of the high court has stayed the process of verification which means as of today no verification will be done. The final judgment is though yet to come. This will apply consequently to all the 135 societies.

Is the policy of DDA to ask the cooperative societies to build the flats for EWS, the correct response to the High Court observations?

Certainly not. The Times of India quotes VC, DDA  as saying “ In order to reduce the huge disparity between the price at which societies take land from DDA and then sell flats to the public, DDA has decided cut down on its own profits. Supposedly a society is building 100 flats, it will now have to build 100 additional DUs of 25 sq. meter each for the informal service providers. Developer would have to take at least 10% more land and the profit margin would reduce”.

This statement of DDA has dire consequences for the following reasons:

(a)   This statement accepts the premise that societies are captured by the builders and instead of  devising a mechanism by which the builders are thrown out and only the real members are enrolled in the society as desired by the High Court, the policy intends to reduce the margins of the builders. Thus the new policy too benefits the builders and not the middle class,

(b)   The builder is a business man and not a moron. When the government is not fixing up the disposal price but is leaving it to the market forces then what stops the builder in adding up the cost of the EWS flat in the final cost of the flat for the middle income group. Thus instead of controlling the prices and making it affordable to the general public the cost of flat will go up. The middle class will be the sufferer,

(c)   The extra land allotted to the builder  may basically be utilized for commercial purpose thus bringing more profit to the builder. It may be known that as per the new policy the amount of land to be allotted to the builder for EWS housing will not be proportionate to the requirement of 25 sq. meter per plat which is the planning norm or 600 DUs per hectare. It will be several times more which will benefit the builder,

(d)   It is formalizing of the process of cornering the land by builders under the guise of a scheme of the Government intending to benefit the middle class.

(e)   In all probability the builder by choice will build the high end flats for the upper strata of the society and dispose it off at the rate unaffordable by the middle class of the society,

(f)   In all probability the builder will by force build the EWS flats for the economically weaker section of the society and then again the middle class is left out.

Thus it seems that the new proposal is neither able to address the issues of keeping out the builder from the Cooperative Group Housing Societies and nor it is able to check the cost of the flats. On the contrary it regularizes the builders role in the CGHS for profit making.

What is my suggestion?

It is fact that the Cooperative Group Housing societies are allotted land by DDA at a subsidized rate which is far below the market price. The motive of the Government is to benefit the middle class of Delhi by providing them the place of living at affordable price. The builders have captured these societies which have become a trading commodity in the market. Now there are two reasonable options for the DDA,

(A)   Recast the scheme and ensure that builders are kept out of the societies and the benefit goes to the real members of the society,

(B)   If that is not possible than auction the land among the societies and let the profit go to the housing schemes for the weaker sections of the society, as in any case when DDA has decided to allot land to the private players then in that scheme costing of plot as well as the flat will be decided by the market. Why then in case of CGHS the costing of plot is allowed at the subsidized rate whereas the disposal cost of the flat will be decided by the market thus ensuring the pocket of the builder gets thicker.

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Untitled Comment

Posted by Anonymous on Tuesday, September 6, 2005 at - Link

In my views, all these suggestions given by you will be good for the future new land allotments of land to the society.
But issue of present members are still not addressed. I would like to have the attention of the people on these folloing issues:
1. RCS do not considers the members of the society those accuired membership between Jan 2003 - onwards, as RCS says the the memberships should have been through newspaper advertisements.
-But no publice notice was issued for the same and people who were in need of flats kept on buying the memberships adverdised by the various builders and the property dealers by paying heafty premiums.
- Was RCS office / DDA sleeping at that time?
- Now the people have paid the full amount and the alotment of flats are being further delayed because of these investigations and the people are suffering again as now the people are coughing both the rent and the loan EMI's through thier nose and further not getting any income tax benefit.
-Middle class people bought flat to ultimately get a roof on thier head and got attracted to the Govt.'s easy home loan policy and thought that in place of paying the rent to pay the EMI's and save on Income Tax as well rather now govt. is not helping the people but further taxing.
Is there any body tolisten our plight?