Committed to interest of home buyers: Minister of Housing & Urban Affairs

Nov 27,2017

Committed to interest of home buyers: Minister of Housing & Urban Affairs

Delhi Metro ridership will go up provided there is safety, reliability and predictability, said Hardeep Singh Puri, Minister of Housing and Urban Affairs.
The hike in Delhi Metro fare has become a political slugfest and the question is what is really right to hike the fares.
Hardeep Singh Puri Minister of Housing and Urban Affairs in an interview to CNBC-TV18 said the Metro Fare Fixation Committee is a statutory body. He is not overly worried about the ridership going down in the near-term.
According to him, ridership will go up provided there is safety, reliability and predictability. He also said Delhi has much higher income and cheaper metro fares.

He also assured the home buyers that in the Ministry of Housing and Urban Affairs there is a system which is entirely committed to ensuring interest of the home buyers.

Q: The big question mark is that the ridership of Delhi Metro has fallen by three lakh commuters and that the fares are unaffordable to a large number of people, another one will happen in January, 2019. Your reaction to that?

A: When did you last travel by metro? Did it give you the impression that the metro is empty and no one is travelling by it? Look, this is a false narrative and the man who has raised the issue also knows that he is philosophising with a false conscience. The situation is quite simple. The metro is a capital intensive asset. It has borrowed huge amounts of money, something like Rs 25,000 crore from Japan, Japan International Cooperation Agencyc (JICA). The amount has to be repaid.

For eight years, there was no increase in the metro fares. Now after eight years, you can decide not to have it for another 1-2 years. I was not around when the decision was taken not to hike the fares. I suspect it was the Delhi government, I do not know. But they decided in 2016 to do what is the right thing which is to establish a fare fixation committee which is headed by a judge of the Delhi High Court. Justice Mehta and two other members, one from the central government and one from the Delhi government.

Q: So equal representation.

A: Equal representation. They decided that there would be an increase in fare in two segments. Now, if you have not raised the fare for eight years, obviously there has to be some increase. So in May, this year, they raised the fare by 57 percent and what was the result? For a few days there was a dip in the ridership and then it went right up. Now, what has happened in October? Again, October 10 was a smaller increase, about 20 percent. Again the same dip has taken place. I have absolutely no doubt that if you look at the figures of all the previous increases whenever they have taken place, there is always a little dip and then the ridership goes up. And the ridership will go up provided you can ensure safety, reliability and predictability.

Q: You are not worried that you are outpricing metro for a large segment of people?

A: Not at all. Pricing is relative to the capacity. Delhi has much higher incomes than all the other Indian cities and it yet it has the cheapest metro. So this is a completely false narrative and I am glad that on Saturday when I heard that they are going to try and tom-tom this as one of their achievements, they have destroyed the Delhi Transport Corporation (DTC). They are 5,000 buses short.

If you want to make the metro like the DTC, I have no comment, but as long as I am Minister for Urban Affairs, I am not going to be party to it. The other thing is I could not have changed it even if I wanted. I became minister on September 3. This was a committee which was established in 2016 and the bulk of the fare increase had taken place in May this year.

Q: So financial viability is important for urban infrastructure? Why not subsidise it? Globally it is subsidised.

A: Let me put it this way. You accepted a certain model when the metro was established. According to that model, there is a 50-50 sharing of burden between the state governments and the central government. If, at some stage, we reach a position where we think that the viability in terms of affordability has to involve a state subsidy, it is something we can look at. But you cannot do this when you had one fare increase in May. And two days before the fare had to go up in October, the Chief Minister started agitating.

If he had done that even a month or six weeks ago, maybe the fare fixation committee could have been convened. I do not know. But I have no control on it. The metro is a special purpose vehicle which has been established. The fare fixation committee is a statutory body.

Q: So you are saying that the government can look at subsidy if it feels it is unaffordable?

A: It cannot be done for Delhi metro alone. You will have to look at, India has just now about 400 km of metro. Another 400 km is under construction. You will need to work out a model which is applicable to the whole country. China has today, 3,000 km. we are hoping to reach 800-900 in a few months' time. If I look at what is happening, Prime Minister is inaugurating the Hyderabad Metro tomorrow. We have another line in Delhi coming up. Yes, at some stage we will look at these things. But just now, the most important thing is to keep an efficient safe reliable metro running and you cannot do that without some increase in fare.

Q: But the second very big question which everybody needs an answer to is what happens to home buyers under the bankruptcy code now? You have written to the Ministry of Corporate Affairs saying that home buyers should probably get the same rights as financial creditors. We are hearing that that may not happen at all. In fact they may get precedence lower than unsecured creditors and that is worrying everybody a lot.

A: People should stop worrying because at least you have in the Ministry of Housing and Urban Affairs a system which is entirely committed to ensuring the interest of the home buyers. Let me start at the beginning. For 70 years of our existence we did not have Real Estate (Regulation and Development) Act (RERA). Now we have got RERA. The problem persists because some state governments tweaked the provisions relating to ongoing projects when they adopted RERA. So now what has happened is that are these ongoing projects outside the purview of RERA? Let me give you a perspective. You would have seen a report saying that there are still something like several lakh units -- six lakh units which have been delayed beyond two years. Now if you compare these figures to what happened earlier, there is a 9 percent drop, so there is some improvement taking place. How do we propose to solve the rest? First and foremost, we have to ensure that RERA is implemented scrupulously.

Q: But in BJP run states itself, it has got diluted and is taking so long. You have Haryana which has just appointed RERA authorities in fact last weekend.

A: Let me just say, first of all, without going to BJP and non-BJP because it is so tempting for me then to pick on non-BJP states. Let me just explain to you. RERA is a new piece of legislation. Each state has to take certain action. Some states have been quick. Others have been slightly slow. But let me assure you that I have been writing to every Chief Minister and I am getting satisfaction. So if some states have been slow, they will get there. In so far as the provisions of RERA and the bankruptcy code are concerned, I am delighted that the government has introduced and amendment through an ordinance because parliament is not in session.

It would have been absurd to have a situation that those who are wilful defaulters, those who have taken money from investors and siphoned it off in different areas, I am not just talking about real estate, if they are allowed then after having siphoned off the money to come and bid for their own assets. Now, I am also a little surprised that we have a situation where major newspapers in the country are giving the views on the one hand and on the other hand. And those who are giving the views on the other hand, no they should also be allowed to bid for their assets, is very surprising. They are the ones responsible for having run the economic entity down in the first instance.

So, I think the ordinance now defines the exclusion in terms of one year of non-performing assets (NPAs) and also where there is a determination on wilful default. Why do NPAs get created in the first instant? Let us be very clear. If the banks were doing their due diligence and ensuring that the loans are given to those who are capable of doing this in an efficient manner, you would not have these NPAs.

Q: So you are saying that promoters not being allowed to bid for their own assets especially if they have been proven to be wilful or not have repaid loans for at least a year is a good step.

A: We are dealing with a classic case of crony capitalism where the builder or the promoter of a company, I am not talking about real estate alone, is in collusion with those who frame public policy.