By Prarthana Mitra
The top court has announced a construction ban in certain parts of the country which is taking a toll on development and infrastructure of the country, claims stakeholders of the real estate industry. Maharashtra, Madhya Pradesh, Uttarakhand, Chandigarh are some of the states where construction has come to a standstill, causing delay in deliveries, affecting property companies and auxilliary industries, besides putting people out of work.
Response from stakeholders
Many have argued that it would have been better if the court penalised the states, and allowed ongoing projects to continue, halting only the new ones. While some have called such a blanket ban hazardous to development, some like Niranjan Hiranandani have expressed displeasure at being punished for state inaction over solid waste management.
“It will choke supply, and impact home seekers. Effectively, home buyers will suffer just because some state governments have not formally notified the policy,” the national president of lobby group National Real Estate Development Council told the Economic Times.
“We understand the Supreme Court’s concerns; however, we feel that the court should not stay construction activity as this will have a direct implication on daily wage earners in the industry while GDP could also suffer,” Getamber Anand, the chairman of builders’ association Credai, said in a statement.
What is the ban about
With the long-term impact in mind, the Supreme Court had announced the ban on construction, targeting certain states and Union Territories which had failed to implement rules and mechanism for solid waste management.
According to the court, the states and union territories had not framed any policy under the 2016 Solid Waste Management Rules put into effect by the environment ministry in April 2016. “There are two parts to this order,” said Nitin Kareer, the State’s Principal Secretary, Urban Development Department.
“The first is regarding States that had not followed up on the court’s earlier order. The second directive pertains to States that do not have a solid waste management policy in place. Maharashtra is not specifically named in this order and this should not be applicable [to] us since we already have such a policy,” he told The Hindu.
States like Maharashtra, with high-value property markets and housing, would be worst-hit by this prohibition, although it doesn’t seem to have rattled realty stocks much. Meanwhile, builders in Chandigarh are worried about property prices shooting up and scaring potential homeowners away. The Goa Foundation, an environmental non-profit, has applauded the order.
“The policy for solid waste management is already in place in Maharashtra, even though the same had not been submitted to the concerned authorities,” said Kotak Institutional Equities in a report. If that manages to elicit a stay order on the ban in the coming weeks, the economic impact won’t amount to much. “If they don’t get a stay, then they will have to wait for the October 9 hearing,” said another Mumbai-based analyst, according to ET.
However, if the deadlock doesn’t end soon, it could cause serious damage to the real estate industry and its various stakeholders, especially homebuyers.
Prarthana Mitra is a staff writer at Qrius.
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