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IASbabas Daily Current Affairs 01 August, 2015



IASbabas Daily Current Affairs- 1st August, 2015


Real Estate Bill: panel backs Govt on locking up only 50% of buyer funds


The Real Estate (Regulation and Development) Bill, 2013 was introduced in the Rajya Sabha in August
2013, and was referred to the parliamentary standing committee on urban development, which gave its
In April 2015, the government had cleared amendments to the real estate Bill, paving the way for the
much-awaited regulator in the residential real estate industry. Commercial real estatesector was also
brought under the ambit of the Bill.
The real estate sector had been devoid of any kind of regulation until now. The Bill assumes importance in
the wake of rising consumer complaints against developers for delaying projects by over 4-5 years.


The Bill aims to establish the Real estate regulatory authority (RERA) for regulation and promotion of
the real estate sector, and to set up an adjudicating mechanism for speedy redressal of disputes. It also
aims to establish the appellate tribunal to hear appeals against the decisions of the RERA.

Present Status:

After the revised Bill was tabled in the Rajya Sabha in May, 2015 it was referred to a select committee. The
Select Committee of the Rajya Sabha has accepted almost all amendments made by the Narendra Modi Cabinet
to the Real Estate (Regulation and Development) Bill, which was originally drafted by the UPA government.

The amendments are largely the industrys demands and pro-buyer measures. They will also help the
government realise its vision of Housing for all by 2022.

Following are the recommendations of the Select Committee:

1. The select committee has suggested that all real estate projects over 500 sq. m or 8 flats be brought
under the purview of the Bill. Currently, the Bill has proposed projects covering 1,000 sq. m or more than
12 flats be registered with the regulatory authority.
2. The Bill, drafted by the UPA, had mandated that 70% of the amount collected from buyers needed to be
kept in a separate account, and to be used only for construction of a particular project, while the rest can
be spent on other projects. The panel, however, has stuck to the NDA governments draft Bill, which has
brought this down to 50%.

Reason- in some cases the land accounts for nearly 80 % of the cost of the project, so keeping 50% or
more in a separate account will unnecessarily block funds. Also, there is a vast difference in the per
square metre selling cost and construction cost of projects in some areas.

Safeguard Mechanisms-

There is a suggestion for further flexibility in the clause by allowing the promoter to withdraw funds from
the separate account to cover the cost of construction in proportion to the percentage of completion of the
It also suggested that the amounts from the separate account shall only be withdrawn by the promoter
after it is certified by an engineer, an architect and a chartered accountant that the withdrawal is in
proportion to the percentage of completion.

3. It has retained all the penal provisions for defaulters in the Bill, including fine for the first offence and
three-year imprisonment for subsequent violations.
4. Promoter should bear all the liabilities till the flat is transferred to the allottees name.
5. Promoters should get their accounts audited within 6 months after the close of every financial year by a
practicing chartered accountant.
6. Developers, both in residential and commercial sectors, will be required to register their projects with the
regulatory authorities to be set up, and they will have to mandatorily disclose all information regarding
the promoters, project, layout plan, schedule of development works, land status, status of statutory
approvals, amongst others.

Redefinition of the Carpet Area:

It has also redefined carpet area the net usable floor area of an apartment, excluding the area covered by the
external walls and that under-service shafts, exclusive balcony or verandah and open terrace areas, although it
would include the area covered by the internal partition walls of the apartment.
Recommendations from the Opposition parties in the Parliament:

1. The Opposition has argued that the clause that the Bill is applicable to projects on a minimum of 1,000 sq
m of land will help large developers.
2. It wanted constructions in smaller areas brought under the ambit of the Bill as well.
3. It also demanded addition of an anti-discrimination clause in the Bill to ensure buyers are treated equally
and not kept from purchasing property on the basis of religion, caste, gender or eating habits.

Key Issues and Analysis:

Parliaments jurisdiction to make laws related to real estate as land is in the State List of the Constitution
can be debatable. However, it may be argued that the primary aim of this Bill is to regulate contracts and
transfer of property, both of which are in the Concurrent List.

Some states have enacted laws to regulate real estate projects. The Bill differs from these state laws on
several grounds. It will override the provisions of these state laws in case of any inconsistencies.

The Bill mandates that 70% of the amount collected from buyers of a project be used only for construction
of that project. In certain cases, the cost of construction could be less than 70% and the cost of land more
than 30% of the total amount collected. This implies that part of the funds collected could remain
unutilized, necessitating some financing from other sources. This could raise the project cost.
The Standing Committee examining the Bill has made several recommendations. These include: (a) the
Bill should also regulate commercial real estate, (b) smaller projects should also be covered, and (c) all
real estate agents must be required to register.

The real estate sector has some other issues such as a lengthy process for project approvals, lack of clear
land titles, and prevalence of black money. Some of these fall under the State List.



Supercritical technology: An issue of ultra-supercritical importa nce

The concept of supercritical technology was

introduced as a national plan in the Integrated
Energy Policy report of 2006 issued by the
Planning Commission.
Ultra-supercritical technology is the new
paradigm that the Indian power sector is
aiming to touch.

Courtesy (image)-

What is this new generation technology?

Since coal is here to stay for a while, the ultra-super critical technology will help green the process while
making it more efficient.
It noted that the average fuel conversion efficiency of Indian power plants is just about 30.5 per cent,
though the new 500 MW plants have efficiency of 36 per cent.
State-of-the-art supercritical boilers can reach an efficiency level of 46 per cent depending on plant
Under Indian conditions an efficiency level of 38-40 per cent should be attainable. This alone can reduce
coal requirement by 111 million tonnes.

How is Super Critical Technology Eco Friendly?

Ultra-supercritical technology uses steam with very high temperatures, up to 620C, and pressure, up to
300 bar, resulting in a much higher efficiency than conventional coal fired plants. A unit burns much less
coal, thereby generating less emission per megawatt of power output.
Power generation companies are likely to make this technological switch to drive up output and plant load
factor, curb variable costs and cut down discharge of pollutants in the atmosphere.
Efficiency savings will not only reduce operating costs and make better use of fossil fuels; they will reduce
the overall liability for emissions.

Will this provide a needed service to India?

This will provide a much-needed service to India, especially for farms and businesses.
Due to an energy deficit of nearly 160 gigawatts, 400 million Indians do not have regular access to
To Indias economic planners, thermal power is the only viable option to fulfill Indias energy demand.
What is within our capability is to minimize the carbon footprint of coal-fired plants. This is wherethe more
fuel-efficient ultra-supercritical technology can contribute.


The union government had been taking a number of initiatives to promote the use of super critical
The government had taken initiative to make easy the manufacturing of component used in the super
critical units.
It is said that in the 13th five-year-plan, only super critical technology-based power plants would be set up
in India.

Connecting the Dots:

What is the status of Ultra super critical coal fired power plant technology in the 12 th FYP?
Is thermal power is the only viable option to Indias economic planners to fulfill Indias energy demand?
How will it contribute in Mitigating Climate Change?


Green power : Renewable Energy

Despite the vague promises and platitudinous statements of intent t

hat it contains, the proposed National

Renewable Energy Act(RE Act), in the form that has been put up for public comments, should come as a
measure of relief to the renewable energy industry inasmuch as it also yields to several of the industrys
longstanding demands.
The draft Renewable Energy Bill lays the grounds for making renewable energy mainstream option.

Courtesy (image)-

Why is the RE Law needed?

The Electricity Act (Amendment) Bill 2015 (proposed) provides many key provisions for the promotion
of renewable energy resources including off-grid / decentralized mode of renewable energy production.
However, from the perspective of future energy resource planning, there is a need to create a holistic
framework to promote the use of renewable energy and its applications not only in electricity (covered
under the E-Act) but also in heat and transport segments.
There is also a need for an integrated energy resource mapping and planning with right set of institutional
and structural support mechanisms for which the RE Law can be a pivotal legislation.

What is the aim of proposed National Renewable Energy Act (RE Act)?

The RE Law also aims to have strong linkages with various other national objectives like:

1. National Action plan for Climate Change (NAPCC)

2. National Mission on Enhanced Energy Efficiency (NMEEE)
3. National Electric Mobility Mission (NEMM)
4. National Wind & Waste Energy Mission
5. National Manufacturing Policy
6. National Skill Development Program

Hence, the RE Law would bring a macroscopic synergies across various national objectives and hence a
much coordinated and robust RE development model.
Is India trying for level playing field for renewables with RE Act?

Renewable energy offers opportunity to contribute to social and economic development, energy access,
secure energy supply, climate change mitigation, and the reduction of negative environmental and health
State governments will also formulate renewable energy policy and plans at state level.
They may also establish a state green fund for the promotion of renewables.
Other recommendations include setting up renewable energy parks and setting renewable energy targets.


The RE Act does a lot of mine-clearing of the path towards the goal of generating 175,000 MW of power
from renewable resources by 2022. However, the government has more work to do.
The industry has often cited two major stumbling blocks transmission infrastructure and the off-taker risk,
or the perception of the ability of the buyer of green power to pay for it.
The transmission infrastructure issue is thus being addressed, though it is doubtful if the infrastructure
will be in place by 2022.
The other issue, off-taker risk, which is based on the poor health of State-owned power distribution
companies, is more vexing.
The answer to that probably lies in the new Electricity Act, which seeks to engender a crop of private
supply companies, to which a renewable energy generator could sell his power.

Connecting the Dots:

What are the Shortcomings of the Renewable Energy Act? Pros & Cons of Renewable energy.
Is India working on a comprehensive Renewable Energy Act 2015?
What is the contribution of renewable energy in the total energy generated in India? How can the current
status be improved?