At present, only 10 per cent external development costs (EDC) is recovered from the builders before providing occupancy certificates, which often allows them to delay payments.
In an effort to take stricter action against builders who often default on or delay payments of external development costs (EDC), the Gurugram Metropolitan Development Authority (GMDA) has revised its system of recovering these costs.
The authority has come up with a new proposal which states that these costs will now be recovered in totality before granting the builders occupancy certificates (OCs) stated a report published in Hindustan Times. The proposal has already been conveyed to the Haryana town and country planning department (DTCP)
Under the new proposal, 10% EDC will be recovered at the time of issuing the change of land use (CLU) permit, 40% at the time of approving the developer’s building plan, and the remaining 50% at the time of providing the project’s occupancy certificate.
“As only 10 per cent EDC is recovered before providing OCs, builders tend to take many years to pay us the remaining amount,” said a senior GMDA official.
According to a recent RTI application filed by city-based activist Aseem Takyar, the number of outstanding EDCs has risen by almost 120% in the last five years. The outstanding EDC amount was estimated to be Rs 7,549 crore in March 2019 for Gurugram alone, which was calculated at Rs 3,427 crore in 2014.
Developers of as many as 246 real estate projects had delayed payment as of April. According to the official sources, EDC is a primary source of revenue for the GMDA and the authority plans to invest over â‚¹500 crore from it into developing public infrastructure.
In the past, Gurgaon MP Rao Inderjit Singh and MCG commissioner Yashpal Yadav, had said that failure to collect EDC was severely hampering Gurugram’s growth.
On April 8, GMDA CEO V Umashankar had written to principal secretary (town and country planning) Apoorv Kumar Singh seeking comments on this proposal. On January 9, Haryana DTCP was sent the initial proposal but the GMDA still hasn’t received a response.
“Approval of building plans and grant of OCs have been kept pending awaiting a decision on the proposal. To prevent further delay, however, the GMDA will be proceeding with their proposed system until they receive a response,” Umashankar wrote in the letter.
He further added, “EDC receipts are short of the expenditures made under this head so far… The significant deficit is severely impeding the fulfilment of development obligations. These development obligations include establishing roads, sewerage, power lines and other external infrastructure which are essential public utilities.”