Real Estate: The real scam
People want to live in a dream house they have always wished for since their childhood. Many scams have unravelled in the past few years, the 2G scam in 2007, Vijay Mallya in 2012, the most recent one Nirav Modi scam and among several others. All of them are considered as scams, however, none of them relates to us directly. There are scams which have directly affected the common people, but the government is yet not ready to announce it as one. There is one scam that has been happening under our nose, the real estate scam.
Many builders have taken the hard-earned money of people and fled away. There are thousands and lakhs of people who are paying EMI's to the banks and have no hope of getting their dream house. They are not left with any alternative. They can't even default on their EMI's because the banks want their money, by hook or by crook. These are the people who are the victim on India's biggest scam: The Real Estate scam.
Not many are talking about this scam. The common people have spurned by the builder, politicians, administration and courts. Yet there is no action taken. The government is also giving false hopes to the citizens just like the builders did.
Jaypee Infratech is one such example of the real estate scam. Jaypee in 2007 promised to build an integrated township on the Noida-Greater Noida expressway, in which it would build 32,000 houses spread across 1,063 acres of land. Now, after 13 years of its announcement, only 6,500 people have gotten possession of their dream home. Despite that, those were fortunate enough to get their flats have also complained about the promises that the Jaypee didn't keep. The quality of the flat and the amenities remain pitiful.
Nirmala Sitaram in November 2019, announced investment fund of Rs 25,000 crore for completing the stalled housing projects. Little did she know the total cost of the stalled housing projects, which is according to the official record a whopping $63 billion. Basically, with this fund, the government will be able to revive only six per cent of the stalled projects.
Livemint quoted Anarock Property Consultants as saying. A total of approximately 576,000 projects worth 4.6 trillion rupees ($63 billion) across seven Indian major cities are running way behind schedule.
According to the data released in a segment by Dilli AajTak, the house owners had already paid Rs 21,000 crores to Jaypee Infratech till 2016. From this money, the company paid Rs 6,000 crores to the banks against the loan. Moreover, Rs 475 crores were paid to the shareholders as a dividend. Rs 1,200 crores were paid to the central government as income tax. The company also spent Rs 36 crores on CSR. This being said, Jaypee spent a hefty amount of money in clearing all the debts, but hardly spent any money on building the dream houses in the Jaypee "wish town".
Jaypee is the biggest contributor to the real estate crises that is currently happening in India. Non-performing assets (NPAs) have surged past Rs 10 trillion. Out of the total NPA, our public sector banks (PSB) account for around Rs 9 trillion. In 2010 NPA was around half a billion rupees. Now after 10 years, NPA's have increased by 20 per cent and India has become worlds number one economy that has the worst non-performing loan ratio.
This is not only the story of Jaypee but many other builders throughout our country. Gaur, Supertech, Amrapali, Emaar are just a few examples of the builders involved in this real estate scam, which is not much talked about.
Sanjiv Kumar, one of the fortunate owners who got the possession of his flat in Jaypee Klassic said, "Jaypee has given me the flat after waiting for five long years. But I wouldn't say that I am a fortunate owner, because the quality of the flat is just pathetic and one just can not live there. I leased out my flat as of now, and you won't believe that rent for a three BHK semi-furnished house is just Rs 11,000! This is not what I thought this property would turn out to be."
Jaypee Wishtown has remained a "wish" for many people. Even those who have received the possession of their home are not happy with the quality of construction. In fact, one of the owners who did not wish to be named said that he would rather live in a Kacha house instead of staying in "that F(w)ishtown".
"According to the agreement Jaypee was supposed to pay a compensation fee of around Rs 6,500 per month for the delayed duration. If we do the maths, I was supposed to get around Rs 4 lakh from Jaypee. Clearly, I haven't received that. Why? Because they told me that they have adjusted this amount with my final carpet area of the flat which they increased it a bit," Sanjiv added.
Banks have a very important role to play in the real estate scam. Banks were supposed to release the money according to the construction stages, but just because the Gaur's have had a good relationship with the officials, the banks kept on giving them the money and even they kept putting this money in their own pockets.
The Gaur's had all the money in the world to spend on top-notch lawyers in the country and cheat the middle class with their hard-earned money.
Now, after 13 years of its announcement, the middle-class is still in a hope to move into their dream house. However, with a government who is least concerned, its again the middle class who will face the brunt of the internal politics.