Citizens' Issues
HC clears investigation into alleged Rs45,000 crore Hiranandani scam

The plush Hiranandani Garden and other landmarks in Powai are allegedly built on land reserved for mass housing in a real estate scam worth Rs45,000 crore today. Some 344 acres of land which would have given decent housing for the common man was turned into living for the well-offs by the reputed builder Hiranandani 

 
The Bombay High Court has lifted its earlier stay on the probe into the alleged Rs45,000-crore Powai real estate scam, making way for the anti-corruption bureau (ACB) to restart investigating Hiranandani Developers, senior state bureaucrat Thomas Benjamin and other unknown persons. The order has given boost to the efforts by social activist Santosh Daundkar and IPS officer-turned-lawyer YP Singh. The mammoth fraud stood exposed due to the diligent efforts made by the then the Commissioner of Mumbai Metropolitan Region Development Authority (MMRDA) A Ratnakar Gaikwad.
 
According to YP Singh, “Now that the HC has lifted the stay on the investigation, it is likely that further probe may open up a can of worms and several ministers, politicians and IAS officers who helped Hiranandani may be apprehended. Further, since the stay on investigation has been lifted, Thomas Benjamin should be placed under immediate suspension by the Government of Maharashtra under the All India Services (Discipline and Appeal) Rules, 1968. It would indeed not be in public interest if such an officer remains as the head of the state public health department.”
 
In July 2012, based on the complaint by social activist Santosh Daundkar, a special court had asked the anti-corruption bureau (ACB)  to file an FIR in the matter against Niranjan Hiranandani, TC Benjamin and other unknown persons for the Rs30,000 crore land scam (Rs45,000 crore in current valuation). 
 
Mr Benjamin, who was earlier additional chief secretary of urban development department and now additional chief secretary of the public health department of the Government of Maharashtra, then moved the HC to challenge the probe. A single judge on 10 July 2012 granted an interim stay on the investigation, pending hearing of the case.
 
The relief has been short-lived as the Bombay HC bench comprising justice Sadhana S Jadhav and justice AS Oka made following observation in the order dated 25 September 2012—“By granting ad interim relief, the writ court cannot interfere with the process of investigation. Hence, we decline to continue the ad interim relief granted earlier.” 
 
In his complaint, Mr Daundkar alleged that the state had given 344 acres in Powai on an 80-year lease to Hiranandani builders in 1986 to build small houses for mass housing. The complainant accused the developer of violating terms and conditions of the tripartite agreement it had signed with the state government and infrastructure body MMRDA in 1986.
 
According to the agreement, 50% of the houses were supposed to be 430 sq feet and remaining 50% of 860 sq ft size, but barring the tenements compulsorily required to be surrendered to the government, there was not a single tenement in the entire complex of 430 sq feet. Only luxury apartments were constructed for the rich that get premium valuations. 
 
The complaint alleges that instead of taking due action against the guilty public servants and private persons, accused principal secretary, urban development department, Thomas Benjamin, and other suspect officers in the Government of Maharashtra started doing a fraud, whereby they started indulging in cunning acts so as to help accused No. 1 (Mr Hiranandani) come out of this fraud. 
 
According to YP Singh, “Niranjan Hiranandani is the president of the Indian Merchants Chamber and recently was felicitated by no less a person than Raj Thackeray. Ironically, Raj Thackeray, who talks so much about the Marathi people, felicitated that person who has eaten up that land, which otherwise would have taken out lakhs of Maharashtrians from slums and chawls, and given them in decent habitats to stay. Raj Thackeray who himself is a builder and is involved in several dubious deals on land perhaps may have had no option but to felicitate a fellow builder.”
 
The complaint states that Mr Benjamin took numerous dubious decisions as follows: 
 
Land not to be taken back even though it was meant for mass housing.
To permit 100% extra FSI to be used on account of TDR without putting in the stipulation of mass housing even though the agreement condition stipulated that every form of FSI shall be used for mass housing.
To not to insist on 15% of tenements to be surrendered to Government of Maharashtra on account of construction done by using TDR FSI. As per the agreement every form of FSI, including the TDR FSI had to be reckoned and 15% of GROSS FSI (i.e. of both normal FSI and TDR FSI) had to be given to Government of Maharashtra at stipulated concessional rates in the form of small tenements.
To condone the infringement of making massive luxurious houses instead of making small houses for mass housing.
Permitting the retention of illegally merged tenements so as to give them a shape of large luxurious houses.
To use the liberal rules of 2007 even though the agreement for mass housing was signed in the year 1986 and that rules of 2007 could never have been applied for a land given for mass housing in the year 1986.
To exclude lift, lobby and many other constructions from FSI computation by using the Development Control Regulations of 1991 whereas in the applicable rule during the year 1986 was Development Control Rules, 1967, which was not so much liberal.
To permit construction of commercial areas in the complex whereas the agreement of 1986 did not make any such provision and was strictly meant for mass housing. It was for this illegal relaxation to the sacrosanct provisions of the agreement that commercial buildings of enormous sizes have come up in the place which was to be for mass housing.
Creation of a legal fiction whereby the matter could be settled by imposing fine. Initially a fine of about Rs2,000 crore was proposed. Now it is learnt that the same has been brought down to about Rs200 crore or even lesser. 
To let off Accused No. 1 without facing prosecution for criminal breach of trust, and violation of the Urban Land (Ceiling and Regulation) Act, 1976 and also the Prevention of Corruption Act, 1988.
To not to take any action against the public servants who allowed this fraud to take place right before their eyes for almost 20 years.
To permit Accused No. 1 to not to dismantle the construction which was under way and half done and to convert the same into small tenements. 
 

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COMMENTS

Nem Chandra Singhal

4 years ago

One more scam in scam-tainted India. Oh My God.
Nem Chandra Singhal

P M Ravindran

4 years ago

shivkumar said it right!

Nothing will change; this drama will play out in due course; yes some more pockets will be lined up.

Chnadrasekar

4 years ago

Thank god Niranjan Hiranandani is not a Bihari

Vaibhav Dhoka

4 years ago

Illegal structures should be mercilessly demolished,detterent action be taken onbuilder/beauracrates and their property be confiscated and used for charity organisation.It should be once fore all EYEOPENER for future scamsters.

shivkumar

4 years ago

Nothing will change; this drama will play out in due course; yes some more pockets will be lined up.

Vinay Isloorkar

4 years ago

Ahan!Dish ish huz!Parden my axent nd speling. My mind is bogled. Das dish explen NCP walkot?

SANJAY SINVHAL

4 years ago

1. HC has asked Hiranandani (NH) to build 430 SFt & 860 SFT tenements now. However court has not said anything about pricing of such tenements. NH has gone on record to make fun of this loophole in Outlook Business (Cover Story) that he will build such tenements but as HC has not mandated any price, he is free to sell them at current Mkt Rates. So HC must immediately spell out the rates for such tenements so NH can't profit more from the millions he already has made
2. Govt should invoke the provisions of the new Act wherein the properties of such corrupt people is attached (Case of Bihar where such properties were converetd to Govt schools etc). NH's properties should be attached & comemrcial space be converted to Govt buildings. May be the New Mantralaya can shift to this complex in these commercial buidlings.

Babubhai Vaghela

4 years ago

Demolish illegal structure.

“Reforms in government policy will not control the fiscal deficit”

Substantial FII inflows are anticipated, if the government’s proactive stance on reforms continues. However, these measures are insufficient to significantly reduce fiscal deficit. A FY13 fiscal deficit of 5.8% of GDP has been forecast, as there is no magic wand to reign in government expenditure, according to Standard Chartered Bank

 
Although the government is keen on gaining mileage with the public and UPA (United Progressive Alliance) coalition partners through reforms in policy-making, these measures would have little impact on the growing fiscal deficit, which is a huge problem the economy faces. The fiscal health of the government is in a fragile state. Recent government efforts to contain the fiscal deficit are commendable, points out Standard Chartered Bank. Specifically, it announced measures to contain fiscal slippage: increase in fuel prices and divestment plans. But this will not be enough. Here are the grim fiscal numbers.
 
On 13 September 2012, the government announced revisions to administered fuel product prices. It is expected that the increases in diesel and cooking gas prices would reduce the FY13 fiscal deficit by only 0.1% of GDP, after adjusting for the reduction in excise duty on petrol.
 
Disinvestment Proceeds
Having made no divestments in the first five months of FY13, the government announced the divestment of its stake in one company (Rs75 billion), and approved the sales of four others in principle (Rs150 billion). If the government approves the offer (Rs200 billion) from a private sector company to buy direct stakes in two other public sector entities, then it could exceed its initial target of Rs300 billion of divestment proceeds. These share sales could result in substantial FII (foreign institutional investor) inflows if the government’s proactive stance on reforms continues.
 
However, these measures are insufficient to significantly reduce fiscal slippage. It was not expected that the government would meet its FY13 fiscal deficit target of 5.1% of GDP, and a combination of factors will lead to significant slippage. “We forecast a FY13 fiscal deficit of 5.8% of GDP, higher than our previous estimate of 5.3%”, Standard Chartered Bank said.
 
Net Tax Collection
Indian corporates and households claim tax refunds for taxes deducted at source. The government makes such refunds on a regular basis; it is therefore important to consider net direct tax collection, rather than gross direct tax collection, when assessing the fiscal deficit. If tax refunds accelerate in the next few months (India refunded Rs980 billion in FY12 and Rs710 billion in FY11), this could dampen net collection. Gross tax collection, especially of corporate tax has actually contracted by 1.5% year-on-year and so the risk of slippage in net direct tax collection is quite likely. The Finance Ministry is targeting an additional Rs300 billion in direct tax revenues by wielding the stick,  slippage of 0.1%-0.15% of GDP in net direct tax collection – and thus overall tax collection – is probable, finds Standard Chartered Bank.
 
Spectrum Sales
Proceeds from spectrum auctions in the telecom sector will be much lower than expected. The government has budgeted receipts of Rs400 billion (0.4% of GDP) from telecom spectrum auctions. However, as the sector is currently going through a rough patch and the government recently revised guidelines to allow staggered payments over the next 10 years, a slippage of 0.2% of GDP from the targeted level of spectrum auction proceeds is highly likely.
 
Subsidies
The government is unlikely to meet its ambitious target of capping the subsidy burden (India subsidizes food, fertiliser and fuel products) at below 2% of GDP in FY13 (2.4% of GDP in FY12), despite the increase in fuel product prices. The subsidy bill could easily reach 2.5% of GDP in FY13, much higher than the budgeted 1.9%. The fuel subsidy bill may exceed the budgeted amount by 0.4% of GDP. The food subsidy bill may increase by 0.2% of GDP thanks to increased minimum support prices for several crops.
 
Government Expenditure
Expenditure grew by 16% in April-July 2012 on higher revenue expenditure, against a budgeted 13% increase in overall expenditure in FY13. Although the government has been trying to cut expenditure, this has had little effect because almost 60% of total government expenditure if fixed in nature—21% of total expenditure goes to interest payments, 13% to subsidies, 13% to defence and 4% to pensions. 
 
In May 2012 the government announced plans to cut expenditure by Rs70 billion. The impact is not visible. Even if the government achieved these reductions, as well as lower defence spending, it is believed that the expenditure would still remain high. The defence minister has announced that steps will be taken to curb unnecessary expenditure growth. Assuming 10% growth (in line with the average of the past two years) rather than the budgeted 13%, the government could save 0.05% of GDP.
 
The lack of past expenditure reforms and slower tax revenue generation, amid weaker domestic growth, will lead to another year of high fiscal deficit, says Standard Chartered Bank. The FY12 fiscal deficit was 5.9% and so a deficit of 5.8% in FY13 would reflect the lack of progress. An even wider fiscal deficit cannot be ruled out, remarks Standard Chartered Bank. 
 
This implies that India’s weak fiscal health may come under further scrutiny, especially by the rating agencies. Even if the government is able to offset some fiscal slippage by divesting substantial shares in public-sector companies, the quality of its commitment to fiscal consolidation may still be questioned, concludes Standard Chartered Bank.
 

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COMMENTS

Bakul Gandhi

4 years ago

Gold is unproductive investment. Government should come out with Gold Bond with nomminal 1% or 2% interest, maturity 10 years.
First, Government takes oevr all Gold lying with Temples and other charitable organisations. This will help the charitable organisations to undertake Social welfare causes.
Secondly, the Government should issue these bonds to individuals upto a limt, say 500 gms per child. This will help in reducing need of buying gold. In turn, this will reduce Foreign Exchange deficit. In turn, depreciation of Rupee will be reversed. This will help in reducing the cost of import of crude oil.
Fourth, offer physical gold to exporters of jewellary.
At any given time, physical gold need will be by rough estimate not more than 20-25% of gold bonds. Today, people are not sure of purity of gold and therefore will get attracted to bond. This bond may be freely transferableto individuals, subject to maximum of 500g per child limit.

Vinayak Bhimarao Mudholkar

4 years ago

The so called 'reforms' are useless. The real causes of deficit are uncontrolled govt. expenditure, no proper use of material & manpower (especially in govt.), rampant corruption, various unnecessary tax rebates, tax evasion, the feast of natural resources to corporates, debt restructuring, love for gold, no incentive for alternative energy, no production of electronic hardware in india etc. The experts do their job of brain washing in favour of the rich; nothing else.

Yes Bank gets RBI nod to start stock-broking biz

The new-age lender, amongst the last of the banks to be granted licences, will invest up to Rs25 crore and enter the highly competitive fray in early FY14

 
Mumbai: Private sector lender Yes Bank today said that it has received the Reserve Bank of India (RBI) nod to enter the equity broking business, reports PTI.
 
The new-age lender, amongst the last of the banks to be granted licences, will invest up to Rs25 crore and enter the highly competitive fray in early FY14, sources said.
 
A majority of its rivals are already into the equity broking business and addition of the product will add to Yes Bank’s bouquet of offerings.
 
The bank’s founder, managing director and chief executive Rana Kapoor said it has been granted approval by the RBI to establish a brokerage subsidiary and the timing for the same coincides with the bank’s thrust on retail.
 
The composition of the low-cost current and savings account (CASA) for the bank is among the lowest in the industry and it has been leveraging on the savings bank interest rate de-regularisation by the RBI to gain more deposits by offering higher interest rates.
 
“The latest offering will also further drive the bank’s CASA momentum, besides opening up avenues for fee income,” it said in a statement.
 
A slew of pure-play brokerages have been bleeding since the past one year so due to high volatility in the market and lowering of commissions by the exchanges. Mandates for takeover of some brokerages are also floating in the market.
 

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