A day after HDFC chief Mr. Deepak Parekh stated that environmental clearances were leading to time delays and hence cost overruns in housing projects, industry body Confederation of Real Estate Development Association of India (CREDAI) has put a number to it.

CREDAI Secretary Rohit Raj Modi said that these add at least 10% to 15% to costs, which ultimately has to be passed on to consumers.

CREDAI Chairman Kumar Gera also concurred with the view that environment clearances leads to escalation in the cost of houses developed by builders. He said that this goes contrary to the government’s intention of providing houses for everyone in the country.

All housing projects with covered areas of more than 20000 square meter have to apply for environmental clearance to the Ministry of Environment and Forest (MOEF). If the project is of less than 150000 square meter cover area, the application can be filed with the state committee, if there is one. For larger projects, applications are processed by the central committee in Delhi.

President of National Real Estate Development Council (NAREDCO) Rohtas Goel, who is also CMD of Delhi-based real estate company Omaxe Ltd, argued that environment clearances within a city development area where a master plan has already been prepared are totally unnecessary and only cause delay in the completion of the project.

The developer is supposed to prepare a voluminous report of environment impact assessment (EIA) and Environmental Management Plan as well as filling up a long questionnaire of around 150 questions.

Under the rules, all appraisals are supposed to be finished within 60 days of being taken up by the committees. That might sound like a reasonable time-frame, but the problem is that the queue is often long. One major reason is that state level committees have not been formed by many state governments as a result of which most projects come to Delhi for appraisal.

The usual issues for environmental clearances in housing and construction sites are usage of groundwater without recharging, lack of sewage treatment facility, lack of municipal connection for supply, inefficient power utilization, blocking of existing water catchments in the area, noise pollution caused during construction, safety of construction site, parking facilities, commons and green space provision in projects and solid waste treatment systems.

All these issues, developers point out, are already discussed and provided for in the process of town planning for a township. So, they ask, why go through the entire exercise again. CMD of Parsvnath Developer Pradip Jain, who is also president of CREDAI’s NCR chapter, said the time required to take all the mandatory environment clearances is normally anything from six months to a year. As a large number of projects are being launched, developers are waiting for their turn to come to make their presentation before the committee and it is only after this that the appraisal process even starts.

Mr. Jain said that the most irrational thing is that even if a developer has bought land in established townships like Noida and Gurgaon in an auction conducted by the government to develop a particular project, the developer still has to approach the MOEF for clearances.

Mr. Gera said that when a master plan is prepared, the town planners take everything into consideration including the environment factors related to the development of the project. Seeking permission from the MOEF means nothing but the duplication of the whole thing again, leading to escalation in costs.

Mr. Modi, who also heads Ashiana Developers, said that even a one-year delay in the project because of environment clearances leads to increase in the cost of development by at least 10 to 15%. That’s because developers can apply for clearances only after acquiring the land. Since the land typically accounts for 60% of the total project cost, this means a year’s interest, often about 18%, gets added to the cost.

Mr. Gera accepted that environment clearances could be made mandatory for new townships where developers acquire land from farmers. In such cases, the developers have to apply for land use change as well. However, he said all environment clearances should be issued within a month.

The urban development ministry has already mooted the idea of expediting environment clearances and proposed that all such clearances should be issued within one month. But that guideline remains on paper while house buyers pay the price for the red tape.