The Gurugram Metropolitan Development Authority (GMDA) has come out with a scheme to recover external development charges (EDC) in phases, at a time when dues from builders in the city have crossed Rs 8,000 crore.
A notification issued by the development authority said a builder applying for change in land use will have to pay 20% of the EDC charges before the building plan is approved and 40% over the next six months. The remaining 40% has to be paid before the occupation certificate is issued.
Builders who have already secured change in land use certificates will have to pay 20% of the EDC charges within 30 days of the GMDA notice. The remaining 80% can be paid in equal installments over the next four years.
In case of instalments, a 12% interest would be levied on the builder and those delaying the payments would have to pay an additional 3% per annum as fine. “Since external development charges are taken by various departments, the schedule will apply to all of them. The proceeds anyway come to GMDA,” said VS Kundu, the GMDA chief.
The development authority has also come up with incentives to encourage builders to clear the dues. Those paying the entire amount at once will be given a 10% discount.
EDC is the money that a builder has to pay for infrastructure work outside the compound of a project. It includes charges for approach roads, drains, electric poles and any other infrastructure that a government agency may build for the project. EDC is charged not only by the GMDA, but also other departments such as DTCP, urban local bodies and HSIIDC. It has, however, become a bone of contention between the authorities and builders, with the latter often delaying its payment.
Mounting EDC dues have also contributed to a funds crunch at the GMDA, and several infrastructure projects that were to be funded from EDC collections have taken a hit. The development authority, in its notice, agreed that EDC dues had affected multiple projects. “Considering the shortfall in EDC receipts and an urgent need to execute the projects funded by EDC, GMDA was required to introduce a comprehensive mechanism for recovery of EDC,” it said.
Not just in the city, EDC collections have been dismal across the state, where dues have surpassed Rs 12,000 crore. Despite several attempts by the authorities to raise the amount, many builders have not yet cleared dues.
Last year, the Haryana cabinet had even launched an EDC recovery scheme, which said that 75% of the interest amount would be waived if a builder cleared the entire principal amount within six months of the notification.