State gets New Committee for Environmental Clearance

A shot in the arm 

As the state gets a second committee to accord environmental clearances, the backlog needs to be cleared at the earliest, says Shilpa Sachdev

Bullets

-       All new and pending construction projects with a built-up area of more than 20,000 sq m coming up in the MMR will need an environment clearance from the newly-formed state level expert appraisal committee  

       As of March 2012, there are 554 cases across the state pending approval

With a view to expedite the approval process, a new panel has been recently formed to grant environmental clearances for construction projects, especially in the Mumbai Metropolitan Region (MMR). Maharashtra already has a state-level expert appraisal committee (SEAC) and this is a second one for the state. The SEAC-I was formed after the ministry of environment and forests (MoEF) issued a notification in 2006, making environment clearance mandatory for construction projects with a built-up area of more than 20,000 sq m in the state. The SEAC II will focus on giving environment clearances for construction projects in the MMR. All new and pending construction projects with a built-up area of more than 20,000 sq m coming up in the MMR will need an environment clearance from this newly-formed committee of the state environment department. 

Currently, more than 500 proposals are still awaiting clearance. According to Rajat Malhotra, COO - Integrated Facilities Management (West Asia) Jones Lang LaSalle India, a separate body to fast-track the projects located in the MMR will help in clearing the backlog. He explains, “State statistics indicate that 50% of the projects requiring clearances in Maharashtra are located in MMR, specifically Thane, Raigad and Mumbai City. About 55% of the pending proposals from Feb 2011 to March 2012 are in MMR. The percentage of pending MMR projects from April 2012 to July 2012 is also about the same. This clearly indicates the need to focus on projects in the region.”


Real estate, especially the residential segment, which caters to the basic need of housing continues to be the most adversely affected sector feels Manju Yagnik, Vice Chairperson, Nahar Group. She says, “Ever since its formation in 2006, SEAC I has been going through the appraisal process for every project proposal including that from the real estate sector in the state before sending its recommendations to SEIAA, the authority which takes the final decision on either issuing or rejecting the environmental clearance. With hoards of applications being received from every industry segment, inordinate delays were inevitable. Reportedly, over 540 proposals are currently awaiting clearance from SEAC I.” 

Other than the developers, project delays also affect the end home buyers who have invested huge sums of money for buying their own homes. Besides dipping into their savings, home buyers who avail of loan facilities either from their employers or banking or housing finance institutions for house purchase, have to start paying EMIs from prescribed dates. Delays in issuing such clearances result in late completion of the projects with serious consequences for buyers. 
  
Yagnik says, “This situation is avoidable if a process for speedy environment clearances for realty projects in Mumbai is introduced. Perhaps formation of SEAC II may bring some relief. No doubt that today all concerned including developers, home-buyers and people at large, are more than keen to protect environment in every possible manner.” 


Malhotra adds, “Inordinate delays lead to erosion of investor and consumer confidence and demands for cancellations and refunds. Environment clearance is an essential pre-requisite for all developments above 20,000 sq.mts. Projects that are able to get the clearance can commit capital to project implementation with the risk securely mitigated.  This bolsters the developer’s, investor’s and consumer’s confidence to commit resource and capital to the development, which will in effect ensure speedy and earnest developmental activity.”


Experts hope that with the introduction of the new committee, many pending projects will soon see the light of the day and benefit the end consumer. Vyomesh Shah, MD, Hubtown Ltd. says, “The issues here require a specific approach and we are glad that such a committee has been formed. It will bring down the clearance time due to its focused approach and also benefit the consumers by increasing the number of launches and hence creating more supply. This will help in stabilising the prices and make the equation favourable for consumers.” 

Yagnik feels that with the formation of SEAC II, which will exclusive look into new as well as pending projects in the Mumbai Metropolitan Region, the load will be divided to a great extent. She says, “With such clear demarcation, both the committees would hopefully be in a position to speed up this process.”

Avers a Lodha Spokesperson, “We believe that the formation of the second committee on environmental clearance is a progressive step by the state environmental department, given a large number of projects across the state pending environmental clearance. As of March 2012, there are 554 cases across the state pending approval. Over half of these projects belong to the MMR region. As the new committee will primarily focus on the MMR region, we see a fairly even split of projects across the two committees, which is likely to speed up the approval process in MMR.”

Ali Lokhandwala, Joint MD, Lokhandwala Infrastructure says, “If approvals are received in time, banks approve the projects for funding faster and buyers can get home loans quicker. It is lesser risk for the buyer and also helpful for the developer who has to run to different committees for approvals. In fact, what we need is single window clearance but even a focused committee is going to be helpful. It hints at a professional approach on the part of the government. Ideally, the committee should also have a developer on board to track the real industry issues and growth.”

Yagnik also feels that the question of applying the same set of norms for environment clearance to every project in every state remains to be addressed. She says, “It’s quite known that every location, region and state in the country has different challenges on the environmental front.  For example, Mumbai with its geographical peculiarities, constraints, its long coast line, burgeoning population and the ever-increasing housing demand, needs to be looked at with a different perspective on environmental issues. Enforcing the standard environment norms for the city’s huge coastal properties, high-rise buildings both for residential and commercial purposes, affordable housing, redevelopment of old and dilapidated buildings and slums and bigger outlay projects have already stalled many of such projects in the city. Many among these projects are required to fulfill a much larger set of norms, causing further delays in receiving clearances.”


Calling for a set of guidelines rather than a committee, Prakash Shah, Director – Finance and Business Development, Hiranandani Constructions rightly concludes, “We already have a state level committee and it has been observed that committees take their own sweet time in granting clearances. This chokes up the supply and creates obstacles in generating enough affordable housing stock in the country. What we need are concrete guidelines for granting environmental clearances. We need systems that will foster fast decision making. We need to be in a position to generate good supply of housing and it needs to be affordable. We are not against formation of a committee, what is important is that at the end of the day work needs to be done.”