Amnesty Scheme to the rescue of stalled SRA projects in Maharashtra

In a bid to breathe life back into the stalled Slum Rehabilitation projects (SRA Projects) in the state of Maharashtra, the state government recently passed a resolution to frame a policy for effective implementation and completion of these projects in the state, several of which seem to have lost steam in the past years.

SRA Projects: The road so far

Vacant land is a scarce commodity in a densely populated city like Mumbai, primarily due to various large land parcels being encroached by slum dwellers over past several decades.

To provide for improvement and clearance of these areas, Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 was enacted for implementing slum rehabilitation scheme on such slum affected lands (the SR Scheme) across the State.

Till date, several SR Schemes have been implemented by developers, however, only a handful of such projects have been successfully completed. These failures in completion of SRA Projects can be attributed to various factors such as economic slowdown, financial constraints, change in political scenarios and more recently, because of demonetisation and the COVID-19 pandemic. Due to this concoction of unfavourable factors, many SRA Projects have either not taken off or are stuck at various stages of development, which leaves the slum dwellers with no options, but to continue to stay in the unhygienic conditions of such slums or transit camps.

The Revival Attempt

With a view to attract lenders and new developers to invest in SRA Projects, which is the only avenue available for creating affordable housing specially in the city of Mumbai, the state government has, in last three years, proposed the following policies and schemes to boost stalled SRA Projects:

The following concessions are offered to such new developers / financial institutions while taking over the projects:

The resolution also provides for imposition of penalties upon the new developer / financial institutions taking over the stalled project to ensure timely completion of rehab buildings within 3 years (additional time may be provided by CEO, SRA for large slum projects). Penalties prescribed are as under:

Financial institutions do not possess expertise to undertake work of re-development of slums and will have to nominate a new developer to take over such development. We observe that the resolution is silent on whether the financial institutions, who are permitted to step in for the defaulting developers as ‘co-promoter’, will have powers to unilaterally nominate a new developer to undertake and resume implementation of the concerned stalled project. Clarifications in this regard, should be provided by the state government.

Comment

This resolution will very well go in the direction to spell out the intention of the government to create a revolutionary revival plan for stalled slum projects thereby furthering the objective to make Maharashtra ‘Slum-free’ State and provide better standard of living and hygiene for slum dwellers and generate more affordable housing.

-     Abhiraj Gandhi (Partner), Amit H Wadhwani (Counsel), Nirali Shah (Associate) & Ketan Jikar (Associate)

For any queries please contact: editors@khaitanco.com