NCLT's Inability to Revive Stalled Realty Projects Raises Concerns, Says Manohar Lal

Union Housing and Urban Affairs Minister Manohar Lal has expressed concerns over the National Company Law Tribunal's (NCLT) effectiveness in resolving stalled real estate projects. Speaking at NAREDCO's annual convention, he emphasised the need for system improvements to safeguard consumer and bank interests. He urged builders to avoid cash transactions, which hinder the real estate sector's growth, contributing 8-10% to India's GDP.

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The minister highlighted that cash dealings remain a significant issue in real estate. He stated that the government is working to eliminate such transactions and urged the industry to cooperate. Aligning circle rates with market rates was suggested as a measure to discourage cash dealings. He also advised against misleading advertisements in project marketing.

Real Estate Regulatory Law and NCLT Concerns

Manohar Lal noted that disputes between builders and consumers have decreased since the Real Estate Regulatory Authority (RERA) law was enacted in 2017. However, he acknowledged instances of fund diversion from escrow accounts without construction progress. He assured awareness of these cases and those involved.

Discussing real estate cases under NCLT, the minister explained that banks approach the tribunal when builders default on loan repayments. "Jitna system sudharna chahiye tha NCLT ke Karan se woh nahi sudhara," he remarked, indicating that NCLT hasn't improved the system as expected. Projects sent to NCLT often remain incomplete, he added.

Improving Approval Processes and Infrastructure

The minister urged NAREDCO to engage with state governments for streamlined business processes and quicker project approvals. He advocated for replicating successful state practices nationwide. As former Haryana Chief Minister, he implemented single-window clearance and schemes for stalled projects during the COVID pandemic.

Highlighting India's rapid growth under Prime Minister Narendra Modi, Manohar Lal mentioned a 7.8% GDP growth in the April-June quarter despite US tariffs. He stressed increasing real estate's GDP contribution to 18% by 2047. Improved infrastructure over the past 11 years was also noted.

Metro Rail Expansion and Future Prospects

The minister discussed India's metro rail expansion, ranking third globally with 1,036 km operational. With around 900 km under construction, India aims to surpass the US as the second-largest metro network worldwide. Enhancing last-mile connectivity for metro travellers was also addressed.

A presentation on improving NCLT's functioning has been prepared with the Corporate Affairs Ministry's input and will soon be presented to the Prime Minister. "We need to correct the system, and if we do it together, it will be better," Manohar Lal stated.

With inputs from PTI