Amitabh Kant Committee Report on Real Estate Projects

Table of Contents☰

What’s in today’s article?

Why in News?
Background
Major Findings of the Amitabh Kant Committee
Major Recommendations of the Amitabh Kant Committee
Who Will Implement This Recommendations?
About Special Window for Affordable & Mid-Income Housing (SWAMIH) Scheme
Eligibility for SWAMIH Scheme
SWAMIH Fund

Why in News?

A 14-member committee, constituted to examine stalled real estate projects and recommend ways to complete them, submitted its report on August 21.

Background

Union Ministry of Housing and Urban Affairs had set up a committee in March, 2023.
The committee was chaired by former NITI Aayog CEO and India’s G20 Sherpa Amitabh Kant.
It included officials of the Union Finance Ministry, Uttar Pradesh and Haryana state governments, the Insolvency and Bankruptcy Board of India, the National Housing Bank and the Real Estate Regulatory Authority (RERA) of Haryana and UP.
The committee has submitted its report to the Housing and Urban Affairs Minister Hardeep Puri.

Major Findings of the Amitabh Kant Committee

Stalled Projects –
- The first question before the committee was how many and where are the legacy stalled projects located.
- The committee’s report cited the Indian Banks’ Association (IBA) as estimating that 4.12 lakh dwelling units of Rs.4.08 lakh crore were “stressed” and about 2.40 lakh (44%) of these were in the National Capital Region.
- Another 21% of the units were in the Mumbai Metropolitan Region.
- The committee concluded that the main reason for the stress in these projects was the “lack of financial viability”, which had led to cost overruns and time delays.
- The committee said the way to solve the problem would be to improve the Internal Rate of Return of the projects in order to attract funding.
- In order to make the projects viable, all stakeholders — that is the developers, financiers, land authorities etc. — would have to take a “haircut” or accept less than what is due to them, it said.

Major Recommendations of the Amitabh Kant Committee

Mandatory RERA Registration –
- The committee began its list of recommendations by reiterating provisions of the Real Estate (Regulation and Development) Act, 2016.
- The RERA Act mandates that all projects where the land is over 500 square metres or the number of apartments to be constructed are more than eight are registered with the respective state RERA.
- This, the committee said, must be “enforced”. Registration of the projects would lead to greater transparency.
Rehabilitation Package for Stalled Projects –
- One of the main recommendations of the committee was for state governments to set up a rehabilitation package to get the stalled projects running again.
- Those developers who sign up for the package would have to commit to completing the projects in three years.
- The committee gave the example of a model package for Noida and Greater Noida that it detailed.
- This includes a “Zero Period” for two years starting with the onset of the COVID-19 pandemic in 2020 where interest and penalties on developers by the authorities would be waived.
- Developers would be allowed to get a “co-developer” on board to complete the work.
- The committee proposed a “partial surrender policy”, in which developers can give back some of the unused lands to the authority in exchange for a waiver on the dues for that land.
Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund –
- The report said the MoHUA should prepare a detailed scheme for using the SWAMIH Fund to “proactively” finance the stalled projects and sent it to the Finance Ministry.
- It said the requirement of minimum Internal Rate of Return and first charge in the SWAMIH fund should be reworked.

Who Will Implement This Recommendations?

‘Land’ is a state subject and most of the recommendations of the committee fall within the purview of the respective state governments.
According to Housing and Urban Affairs Ministry officials, the report has been sent to all states, who will decide on if and what they want to implement.
In the case of UP, the NOIDA and Greater Noida authorities have already moved towards implementing the rehabilitation package envisaged in the report.
It remains to be seen if other states will accept the committee’s findings and implement the measures recommended by it.

About Special Window for Affordable & Mid-Income Housing (SWAMIH) Scheme

In November 2019, the Central Government had launched the SWAMIH Scheme.
Objectives:
- To provide priority debt financing for the competition of stalled housing projects falling under the affordable and middle-income housing categories.
- To provide relief to real estate developers that require funding to complete their unfinished projects and consequently ensure the timely delivery of homes to the buyers.
It is expected that the scheme will aid the growth of real estate sector in India.
About 1,509 housing projects comprising approximately 4.58 lakh housing units fulfil the eligibility criteria to benefit from the scheme.

Eligibility for SWAMIH Scheme

Funding shall be provided to the projects that meet the following criteria:
- Stalled for lack of adequate funds
- Affordable and Middle Income Category
- Net worth positive projects
- RERA (Real Estate Regulatory Authority) registered
- Priority for projects very close to completion

SWAMIH Fund

SWAMIH Fund is a government-backed fund, set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI.
- Alternative Investment Fund means any fund which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
The Investment Manager of the Fund is SBICAP Ventures, a wholly-owned subsidiary of SBI Capital Markets, which in turn is a wholly-owned subsidiary of the State Bank of India.
The total commitment of funds to be infused by the Government in the affordable and middle-income group housing sector through the Special Window would be up to Rs. 10,000 crore.
The maximum finance for any single project is Rs. 400 crore.

Q1) What is the purpose of RERA Act?

The Real Estate (Regulation and Development) Act, 2016 (RERA Act) is a comprehensive legislation in India that aims to regulate the real estate sector, protect the interests of homebuyers, and promote transparency and accountability in the industry.