How government agencies fast-tracked Lavasa | Features | Environment

 
Lavasa, the picturesque planned hill station being developed by Hindustan Construction Company (HCC) near Pune, is facing charges of illegal land acquisition and environmental violations and construction has been stayed pending an inquiry. 



This article says that the focus should be not on the misdemeanours of the corporation but on the collusions and oversights of government

The bureaucracy moves at snail’s pace in India. But look at the speed with which the Lavasa project, currently under scrutiny from the Environment Ministry and construction stayed pending scrutiny of irregularities in sanctions granted to the project, was sanctioned. Clearance was granted within months of its application of purpose, indeed even before the application was submitted to the concerned departments and ministries!

Thousands of scheduled caste and scheduled tribe families in this Mulshi-Maval region have languished for decades without caste certificates to support their legal entitlements to the land, or access to basic services. The ignorance of these poor families -- nomadic tribes (Dhangar) and tribal communities (Koli, Katkar, Thakar and Marathas) residing in small community hamlets -- worked in favour of Hindustan Construction Company (HCC) and the state of Maharashtra.

Had it not been for the voices of a few concerned citizens of Pune city, who recognised the long-term implications of such a massive infrastructure project, the socio-environmental consequences of the project would never have come to light.

Brand ‘Lavasa’

Lavasa Corporation was originally registered as Pearly Blue Lake Resort Private Limited Company, in 2000. The project was a business hotel to be developed on the banks of Warasgaon lake in Mose valley, Mulshi block, Pune district. The company changed its name to Lake City Corporation Pvt Ltd on December 12, 2000. Later, in June 2004, it changed it again to Lavasa Corporation Limited (International Securities Identification Number INE172G01016).

The hill station project is being driven by a consortium of companies led by Hindustan Construction Company (HCC), which holds 65% of the stake in Lavasa through its real estate subsidiary HCC Realty. Other investors include the L M Thapar Group and Venkateshwara Hatcheries, besides several minority shareholders with 35% equity.

The project in a nutshell

Lavasa is a sprawling private real estate project, 65 km from the city of Pune in Maharashtra, nestled amidst 18 hills and 975 metres above sea level.

The project was approved under Section 20 (3) of the MRTP on July 15, 2000. Accordingly, the Maharashtra Urban Development Department declared 18 villages in Mulshi and Velhe block -- a total of 25,000 acres of land -- part of the project. Since then, the inhabitants of around 20 villages have faced eviction, land alienation, harassment by project officials, cheating by the land mafia and company agents, denial of community access to freshwater bodies, river, temples and common roads. And the destruction of their natural habitat and forests.

The people of these villages comprise poor marginal farmers who depend heavily on traditional farming techniques, livestock rearing, collection of non-timber forest produce, fishing, daily wage labour, and collection of natural resources. Though they have been living in the area for generations, it was only in 1964 that poor landless and socio-economically backward families were allotted excess ceiling lands under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961. They made these lands cultivable and survived on them without any support from the government.

In 1974, construction of Warasgaon dam began, and of the scores of families displaced only a few were given compensatory land in Daund taluka (125 km from Pune). Many were left in the affected area to fend for themselves, without adequate compensation or rehabilitation.

Thirty years on, the Lavasa township project has brought back painful memories.

The completion target for the Lavasa project is 2022. It is being planned in four phases. The overall size of the project is said to be almost one-fourth the size of Mumbai city.

Role of the state government

The Maharashtra state government has supported the project wholeheartedly, be it in granting permission for land acquisition by denotifying ceiling lands, transferring lands belonging to the Maharashtra Krishna Valley Development Corporation reserved for public purposes, granting of environmental clearance, no-objection certificates and forest clearance. Above all, obtaining a no-objection from the zilla parishad for changes in local infrastructure, etc.

Facilitating corporate land grab

The Maharashtra government notification dated November 26, 1996 relating to the Maharashtra Regional and Town Planning (MRTP) Act 1966 that proposed the development of hilly areas throughout the state as hill-stations and resorts is at the root of issues related to land acquisition for hill station development. The notification was introduced to circumvent regional plans so as to make it easy for land sharks to claim the valleys. It has been contentious on the grounds that the regulations have been framed for the benefit of moneyed companies and the commercial exploitation of scenic places.

1. Clause 17 of the notification deprives the collector of discretionary powers to be exercised for the benefit of tribals.

2. The notification also impinges on the provisions of the Maharashtra Agricultural Land Acts 1961, The Maharashtra Land Revenue 1968, which relates to the transfer of land from tribals to non-tribals.

3. The other acts contravened are the Maharashtra Land Revenue (disposal of government land) Rules 1971, the Indian Forest Act, 1927 and the Forest Conservation Acts, 1980.

4. The notification also allows disposal of up to 2,000 hectares (20 sq km) of agricultural land against 21 hectares earlier imposed under the provisions of the Maharashtra Agricultural Land Acts, 1961.

Land notified for Lavasa

In 2000, the Maharashtra government declared around 12,500 hectares of land for development of a hill station. Initially, the proposal was for a small lake city project; this later spread to revenue villages in Mulshi and Velhe blocks, including Daswe, Mugaon, Lavharde, Vegre, Bhode, Pathershet, Bombatmal, Palase, Admal, Padalghar, Wadavali, Sakhari, Bhoini, Koloshi, Ugavali, Dhamanhol and Gadale, in Mulshi block, and Mose Budruk, Shiv Budruk and Varasgaon in Velhe block. The land acquisition was carried out by three different departments -- the irrigation department (Maharashtra Krishna Valley Development Corporation [MKVDC]), forest department, and revenue department. It involved the acquisition of 2,500 acres of plantation land in two blocks, for which permission was granted by the forest department. It is worth mentioning here that on November 13, 1999, the Director, Town Planning, Pune, gave a report clearly stating that the land was forest land. The irrigation department allocated 141.15 hectares of land on lease to the company at a royalty of as little as Rs 275,250 per annum.

Though Lavasa claims it has not constructed on forest land, it cannot deny that roads have been built or pass through forest land for which hundreds of trees have been cut. One wonders how the local forest department allowed this without forest clearance from the central Ministry of Environment and Forests (MoEF). The forest officer of Khanapur, Haveli block, gave permission under the Maharashtra State Tree Felling Rules (Amendment) 1964 to cut trees and shrubs in the project area.

The MKVDC land allotted to the Lavasa project was reserved for public purposes. Interestingly, the same land had been claimed a number of times by people affected by the Warasgaon dam project; their claims were denied on grounds that the land was supposed to be used for public purposes. The company acquired the land on the basis of a 99 to 999-year lease.

Private land transactions

Over the past one-and-a-half decade, every land sale and purchase in Pune district has revealed the involvement of the land mafia. There are rumours about Lavasa too. From Daswe, where the company has built its first-phase dream town, to Mugaon village, which is being developed in the second phase, there is talk of forcible acquisition and purchase of land, forged signatures, misuse of power-of-attorney, community land disputes, devasthan land disputes, and joint ownership disputes.

Since 1996-97, when the land deals were initiated, companies like Pearly Blue Lake Resort and Aqua Land Pvt Ltd were also involved in the purchase of land. The company is supposed to have looped in several real estate agents to buy land for as little as Rs 500-Rs 5,000 per acre. Land agents from the villages and from Pune city, made small initial payments to the landholders, with promises of huge sums later. Most of the lands acquired from the Dhangar, Koli and Maratha communities are ceiling and inami (gifted) land distributed by the state government to the landless in the 1970s.

Locals recall that the district revenue officer and agents used to come together and discuss ceiling and inami lands in various villages. This caused a lot of apprehension, with people hurriedly collecting their land records. Some paid close to Rs 10,000 to the local talathi for copies of their land entitlements (7/12).

Agents and brokers are said to have played an important role in the land grab. In many instances, they bought 2 acres of land and registered about 10-17 acres. There are cases where the 2007 land records show ownership in the name of a local family, but records dated around the same time show a change in title name. In Mugaon village alone, 67 tribal families claim they lost 330 acres of land and did not receive any compensation. After being forcibly evicted, they realised that they no longer owned the land because the new land records did not show their names!

According to a letter written by the district collector, Pune, dated 4/7/2001, it is suggested that adivasi land cannot be acquired or transferred without consent from the competent authority. Likewise, forest land that has been affected by development projects like dams cannot be acquired without permission from the competent authority. Type-2 land or government land such as adivasi land, watani land, tenancy land, devasthan land, sites reserved for rehabilitation etc also cannot be acquired without permission from the competent authority. Most of these types of land would have been acquired for the Lavasa project with permission from the district collector, who is the competent authority under the MRTP Act, 1966. Lavasa Corporation has also been given approximately 1,042 acres of government land at a nominal price.

According to local residents, the agent who did most of the land deals, especially tribal lands in the villages of Dhamanhol and Mugaon, promised people jobs in the company and construction of a temple and other facilities in the village if people parted with their lands. In the few cases where villagers filed complaints against Lavasa Corporation, the government conducted an inquiry. Some cases were resolved, but others in Dhaman Ohal, Gadle, Sakhari and Mugaon carry on.

The role of the talathi and tehsildar is extremely important in all these cases of land transfer. Most people whose lands have been transferred to the company’s name have been struggling to access current land records. Filing appeals with the authorities has so far been unsatisfactory.

Ceiling land transfer to the company

According to the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, Article 27, ceiling land should be distributed among the landless, poor and socially deprived. However, the revenue department (letter dated 5/3/2005), Pune, believes otherwise. The district collector argued in favour of the company, allotting it excess ceiling lands amounting to 373 hectares. In 1976, in the villages of Mauje Gadale, Dhamanohol, Mugaon and Wadiwale, a total of 372 hectares was found in excess of the ceiling but was not taken under possession, under the Land Ceiling Act, Section 21 (4). In 2005, the then district collector suggested that if the land were given to the company instead, the government would benefit.

Moreover, land measuring 609 hectares that had been given to landless farmers for agriculture under the Maharashtra Land Ceiling Act (especially those belonging to katkari tribe families) was taken back and transferred to Lavasa.

Water resource privatisation

According to a letter written by the district collector, Pune, (dated 4/7/2001), the company is barred from claiming any rights over and disturbance to water resources such as streams, ponds, dams, freshwater sources, natural springs, etc. Nor can the company claim rights to civic amenities like traditional riparian rights, public roads, lanes, roadways, etc. However, Lavasa Corporation is allowed to build eight weirs (walls that control the flow of water) in the backwaters of Warasgaon dam for commercial use -- water sports, water villas, tanks, and water parks.

The company’s plans include the building of 10 captive mini dams which will definitely affect local riparian rights. After Lavasa built the Daswe check dam, villagers and their cattle have been denied access to water. Heavy security has been put in place by the company to safeguard its territory. In Mugaon village, the katkari hamlet has been suffering due to lack of fresh water. The company denies them access to the reservoir, the catchment of which will supply water to the project, saying that they should either relocate or face the consequences. The waterbody that is supposed to be a community resource has become the company’s private resource, strengthening its power to harass poor villagers and force them to live without basic resources.

In the few years since the Daswe check dam was constructed, there has been no water downstream during summer, whereas, because of the dam, Lavasa does not suffer. This means that the natural flow and storage of water in the valley has been greatly affected by massive construction and infrastructural changes.

Transfer of Maharashtra Krishna Valley Development Corporation land

In the lease agreement dated August 28, 2002, the Khadakvasla Irrigation Division allotted 141.15 hectares of land belonging to the Maharashtra Krishna Valley Development Corporation, on lease for 30 years from September 2, 2002, to the Lake City Corporation. A PIL against this move is ongoing in the Bombay High Court since November 15, 2006. According to the PIL, there are several irregularities in the way the government has dealt with Lavasa Corporation. According to the rules, excess land under the Maharashtra Krishna Valley Development Corporation can only be used and transferred for a ‘public purpose’, not for private use. The PIL challenges the transfer of MKVDC land to Lavasa Corporation, alleging political favouritism.

It is worth noting that the land that MKVDC transferred to Lake City Corporation belonged to villagers displaced during construction of Warasgaon dam in the 1970s. Since then, the villagers have made several appeals with the irrigation department to hand the remaining unutilised land back to the families. The department paid no heed to the requests; instead, the land was given to the company within three days of signing the MoU.

The company has also got permission from the Khadakvasla Irrigation Division to use water from Warasgaon and Temghar dams. The Khadakvasla reservoir, on the Mose river, was built to meet the water requirements of Pune city. It has a capacity of around 11.5 TMC, almost equalling Pune’s annual needs.

Pune is a fast-growing city, and the problem of water scarcity is a real one. Allowing huge amounts of water to be used by Lavasa Corporation, not only for drinking purposes but for water sports, hotels etc, will worsen the water crisis. No impact assessment has been carried out.

Environmental violations

According to Lavasa’s environment impact assessment (EIA) report, prepared by NEERI, 50% of the area is covered by vegetation, 23.39% by forests. Construction of the huge lake town, and a population of 200,000 during peak time, will undeniably impact the area’s flora and fauna. The report states that 43% of flora in the study area consists of medicinal plants. It does not feature any impact mitigation or preservation plan.

Mulshi and Velha valley, where the project is coming up, experiences some of the heaviest rainfall in the world. The area is lush with tropical vegetation and it is imperative that, considering the fragility of the Western Ghats, it be left undisturbed. Construction activity is drastically altering the natural landscape, opening the valley and entire ghats region up to environment degradation. This will have an impact on rainfall patterns in the long run.

A document by the Maharashtra government, dated April 12, 2004, permits Lavasa a ‘stone-crushing’ unit under the ‘orange’ category of small-scale industries, for which the hills have been cut. Another letter from the revenue collector, dated July 15, 2003, allows the company to quarry for Daswe. These permissions from the governing authorities, with no strict compliance norms and no studies on the impact of these activities on the fragile biodiversity of the hills, will cause enormous damage to the Sahyadri hills. The continuous crushing, quarrying and ferrying of raw materials in the project area has already had an impact on the local environment.

The recent show cause notice issued by the central Ministry of Environment and Forests (MoEF) to the company clearly shows that the company has flouted the environmental laws. The project was supposed to take environment clearance from the MoEF, under the Environment Impact Assessment Notification of 1994. But it never approached the ministry. Rather, the project took environmental clearance from the environment department of the state government which is not competent to do so.

Parts of the project are at an altitude of over 1,000 metres; roads pass through forest areas; about 10 dams are to be constructed; the project is for more than 1,000 persons; and investments cross Rs 50 crore. All these factors call for environmental clearance under the 1994 notification. The company sought environmental clearance in 2004 when the aforesaid notification was binding on any project. Instead, environmental clearance was granted by the environment department of Maharashtra, and within record time of around two months, on 18-3-2004, vide letter No Env/Cle/765/CR.105/TC. In the letter, the environment department does not mention that clearance has been issued under EIA Notification 1994. It can also be construed from this letter that the department did not issue the specific environment clearance prescribed under EIA Notification 1994 but a general clearance letter identical to a routine NOC issued by the department.

On September 4, 2005, the central MoEF wrote to the government of Maharashtra saying that construction at Lavasa was being carried out without the mandatory environmental clearance required under the Environment Impact Assessment Notification of 1994. Notwithstanding these instructions, various authorities in the Government of Maharashtra shut their eyes and took no action on the matter. The company is in violation of the Environment Protection Act, 1986.

Incidentally, environment clearance was issued for development of a 2,000-hectare township hill station. However, the company is developing more than 25,000 hectares -- a clear violation of conditions imposed by the environmental clearance letter.

Lavasa, a fast-track project

During 2002-03, 31 no-objection certificates (NOCs) were granted to Lake City Corporation (later changed to Lavasa Corporation) by various departments such as the MKVDC, Konkan Irrigation Department, Maharashtra Tourism Development Corporation and Maharashtra Pollution Control Board. These were for construction of mini-dams and impounding of water for commercial use, tree felling, quarrying, stone crushing and purchasing land for industrial use.

Some of the MoUs and clearances granted to Lake City/Lavasa Corporation in 2002-03 from various departments of the Maharashtra government are:

• May 30, 2002: NOC (No BO/TB/RO (HQ) Pune-163/444) for development, from the Maharashtra Pollution Control Board

• June 5, 2002: MoU between Lake City Corporation and Maharashtra Tourism Development Corporation

• July 4, 2002: Maharashtra Krishna Valley Development Corporation’s (MKVDC) NOC (No TPD/ADM2/RBR/2543) to construct DTR

• July 16, 2002: MKVDC’s permission (No KID/ADM/4891/2002) to construct dams and store water

• August 9, 2002: Irrigation department, Konkan region, NOC (No 89.01/(18/2002)/U-5/3074) to construct dams and store water

• September 23, 2002: 30-year lease agreement between MKVDC and Lake City Corporation for construction of mini-dams in the submergence area of Warasgaon dam and impounding of water for commercial use

• December 11, 2002: Permission (No DI/Land Permission/255/2002 C-17386) from the industries department to buy land for industrial purposes

• December 13, 2002: NOC from the environment department (No ENV (NOC) 2000/765/CR.105/TC.1) for development

• January 2, 2003: Forest department’s tree-felling permission (No B/M/907/2002-03) for DTR/RFO, Khanapur

• January 10, 2003: Tree-felling permission from the forest department (No 576/2002-03) for DTR/RFO, Paud

• March 12, 2003: Land-use certificate (No DDTP-Pune/Final RP Pune/Zone Cert/822) from the town planning department

• April 10, 2003: MKVDC permission (No PB-4/KID/91/203) to carry out preliminary works

• July 15, 2003: Quarrying permission (No Mining/SR/391/2003) from the revenue collector for Daswe

• December 20, 2003: Irrigation department (Konkan region) agreement to construct dams and store water

• March 18, 2004: Environmental clearance (No ENV/cle/765/CR-105/TC.1) for project

So, who is responsible for the controversy that surrounds Lavasa? The state knowingly ignored all attempts to assess the project before clearing it. It is the responsibility of the state and its agencies to make corporations abide by the rules of the land. In this case, Lavasa flouted several regulations, thanks to state support given in the form of various clearances. Over the past five years, attempts by environmentalists, social activists and villagers to raise the issue at all levels of government have failed. It’s time the state government made its position clear. As Plato rightly said: “The community suffers nothing very terrible if its cobblers are bad and become degenerate and pretentious; but if the guardians of its laws and constitution, who alone have the opportunity to bring it good government and prosperity, become a mere sham, then clearly it is completely ruined.”

To read the stand of the Lavasa developers, read this interaction with Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company, at http://www.indianexpress.com/news/the-environment-ministry-does-not-have-measurable-standards.-so-how-do-you-know-what-and-whom-to-deal-with/735248/


References
1 Interim Report of the People’s Commission of Inquiry on Displacement in Sahyadri Region, April 20, 2009
2 Technical Analysis Report of EIA of Lavasa Corporation-Lake Town at Moshe valley, Pune district, 2009
3 Committee on Land Reform, Ministry of Rural Development, GOI, Visit to Maharashtra Report, April 3, 2008
4 Letter written by the district collector, Pune, to the revenue department, Pune, dated 9/1/2005
5 Environment clearance letter No Env Cl/765/CR105/TC.1, environment department, government of Maharashtra, March 18, 2004
6 Forest department’s tree-felling permission (No B/M/907/2002-03) for DTR/RFO, Khanapur, January 2, 2003
7 30-year lease agreement between MKVDC and Lake City Corporation for construction of mini-dams in the submergence area of Warasgaon dam, and impounding of water for commercial use, September 23, 2002
8 Urban development department under notification No TPS-1800/1004/ CR-106/2000/UD-13, dated 1/6/2001
9 Letter written by the district collector, Pune, dated 4/7/2001

(Rifat Mumtaz works on developmental issues with a focus on land rights and the environment. She is with NCAS, Pune)

Source - Infochange News & Features, January 2011 -How government agencies fast-tracked Lavasa | Features | Environment

Facts about 0% EMI Finance Schemes | InvestmentYogiInvestmentYogi

Facts about 0% EMI Finance Schemes | InvestmentYogiInvestmentYogi:


This festival season you might have decided to upgrade your television set from LCD Flat Screen to LED Smart Television or purchase Samsung Note Book / Apple Iphone / Nokia Lumia replacing your old Android Mobile Handset, etc. Attractive promotional schemes from manufacturing companies and retail stores will roll out in the market from this week as Navratri – the first festival of the season is commencing from 5th Oct, 2013 followed by Dussehra, Diwali and Christmas. When we look at the statistics of last few years, purchase of consumer goods through 0% finance schemes has attracted many customers and sales through this scheme has contributed 20-30% to top-line for retailers in the market. However, before you take a decision to purchase consumer goods and get trapped in some promotional offers we recommend avoid 0% emi finance schemes offered by banks or credit cards because there are some hidden costs and disadvantages attached to it, which we will discuss in this article. Now, RBI has also stepped in from 24th Sep, 2013 to halt 0% finance schemes offered by banks to purchase consumer goods.

Disadvantages of purchasing consumer goods on 0% finance schemes are as follows:

1) Processing and documentation fees

Banks charge one time processing and documentation fees from customers, while purchase on 0% finance schemes. The fees vary from bank to bank, but will be in the range of Rs 500 to Rs 1,000. So, this will be additional cost on products you have purchased.

Take an example, Mr Abhishek opts to purchase 42 inch LED Smart Television Set which costs Rs 60,000 from store. Now, he applies for 0% finance scheme to pay monthly EMI on his purchase. To apply for the EMI schemes, he shells out additional cost of Rs 1,000 against processing and documentation charges. Now, his LED set would cost him for Rs. 61,000 (inclusive of processing charges).

2) Pay interest rates on your purchase

As per information gathered from various retail stores, it can be said that banks are charging hefty interest rates from customers while purchase on these finance schemes with 0% EMI. Interest rates vary for six months and nine months tenor among banks. These interest rates are as follows:

Banks                         6 months tenor     9 months tenor

State Bank of India  4.25%                     6.35%

HDFC Bank               5.2%                        7.25%

ICICI Bank               4%                            6-6.15%

Now, after RBI intervention in the 0 interest finance schemes to purchase consumer goods, banks such as SBI, Axis bank, Kotak Mahindra, etc have already withdrew zero percent facilities.

Taking forward Mr. Abhishek’s example, the cost price of Rs 60,000 for LED will have additional cost of interest expense over it. So, consider if he had opted to purchase LED with 6 months tenor (EMI instalments) from ICICI bank. The interest rate applicable will be 4% on his purchase. Now, EMI for 6 months will be Rs 10,117. So, at the end of 6 EMIs, total amount he pays off is Rs 60,702. So, purchase of RS 60,000 has now led him to pay additional cost Rs 1,702 (Rs 1,000 processing fee + Rs 702 interest cost).

3) Losing out on discount while shopping

Retail stores and shop dealers on roadside offer discount when you opt to purchase through cash or debit card. This discount varies on your negotiation skills and brand of the product you opt to purchase. I did a survey in few retail stores and dealer shops to understand cash discount they are ready to offer if shown interest to book the order immediately and pay full amount by debit card. Retail stores offered me cash discount in the range of 3-5% on purchase of LG, Panasonic, Toshiba, Onida, etc LED sets. On the other hand, dealer shops on roadside offer cash discounts between 5-10% while purchasing similar brands and models from them. But, getting a discount on Sony and Samsung LED’s is a difficult task as they are market leaders and have marginal operating price across all retail / dealer stores in India. However, it’s possible to get a price break or complementary gifts of Rs 2000 to Rs 2,500 on Sony and Samsung LEDs, but require smart negotiation skills to deal with the Store manager / Associates.

Next time, before stepping into a retail store to purchase any consumer good, get a best price for the same product from a nearby dealer store. Then, take a decision to purchase from a store which saves money from your pocket and gives better sales service.

Here, we can say Mr. Abhishek missed an opportunity to save Rs 3,000, assuming 5% cash discount on purchase of Rs 60,000 LED set. Instead, he paid Rs 61,702 for LED costing Rs 60,000 in the market.

Set your preferences before stepping out for shopping consumer goods

There are few questions which you require an answer to, before stepping out to purchase any consumer products in the market. There is a high probability you will be confused with various brands and features in the market. So, take an example of Mr. Abhishek, who decides to purchase LED television set. The points he would discuss with his family / wife will be:
Size of the LED set required to be installed in drawing room
Should we give preference to brand or additional features at best price?
Whether we want to buy from retail store or nearby dealer shop?
Payment option i.e. 0% emi finance scheme or cash (debit card)?
Set a budget price for consumer product you intend to purchase.

Based on a survey at few retail and dealer stores, I would like to share some insights as follows:
Associates at these stores tried to push products which have attractive features and gives them better commission (profit) on sales if you have not decided your preference before stepping out for shopping.
Associate gives demo of branded LEDs like Samsung and Sony on request but makes them inferior in features while compare to other brands like LG, Panasonic, Toshiba, etc. Also, prices of Samsung and Sony are much higher compared to other brands, so consumer easily gets diverted to other known brands while purchasing to get additional features at discounted price compared to branded market leaders. So, here if you have set your preference clearly, you will not fall in the trap of seller while shopping.

Conclusion

Let us calculate in table the total savings Mr. Abhishek will have from purchase of LED on cash with discount.

Particulars      Purchase on 0% finance schemes         Purchase on cash with discount
Cost price of LED (Rs)                 60,000                                             60,000
Add: Processing Fee (Rs)                  1,000                                             0
Add: Interest Payable (Rs)                 702                                                 0
Less: Cash Discount (@5%)                  0                                               3,000
Total Cost (Rs)                   61,702                                                         - 3,000
Total Savings (Rs)                4,702
Additional Expense Incurred (%) 8% (approx.) by opting for 6 months financing scheme


With purchase on cash, Mr. Abhishek has saved Rs 4,702 as computed above. This saving can be utilised for other expenses (shopping) or invest in short term FD to earn cumulative interest. So, for consumer benefit, RBI has also intervened and is now against 0% finance schemes on emi offered by banks at retail / dealer stores. They want shoppers (consumers) to do shopping on debit card/cash and get additional benefit of discount from stores. So, improve your negotiation skills to get the best price for consumer goods of your preference and enjoy your shopping in this festival season….!!!!!

The author has presented his personal views in this article through knowledge and interaction with people at few retail/dealer stores in Mumbai.

About the Author:

Hiral Thanawala is a PGDM (Finance) graduate and Certified Financial Planner with an experience of over 5 years in equity market and personal finance domain. He can be reached at expert@investmentyogi.com
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Acquisition of Immoveable Property in India - F.A.Q

Q.1 Who can purchase immovable property in India?
 A.1 Under the general permission available, the following categories can freely purchase immovable property in India:
i) Non-Resident Indian (NRI)- that is a citizen of India resident outside India
ii)  Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

1. at any time, held Indian passport, or 

2. who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). 

 The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land / plantation property / farm house in India. 

Q.2.  Whether NRI/PIO can acquire agricultural land/ plantation property / farm house in India?
 A.2. No. Since general permission is not available to NRI/PIO to acquire agricultural land/ plantation property / farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.

Q.3. Do any documents need to be filed with Reserve Bank of India after purchase?

A.3. No.  An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents with the Reserve Bank.

Q.4. How many residential / commercial properties can NRI / PIO purchase under the general permission?
 A.4. There are no restrictions on the number of residential / commercial properties that can be purchased.

Q.5. Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?
 A.5. No.

Q.6. Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?
 A.6. No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India. But, he/she may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement of taking any permission of or reporting to Reserve Bank 

Q.7 Can a foreign national who is a person resident in India purchase immovable property in India?
 A.7. Yes, but the  person concerned would have to obtain  the approvals, and fulfil the requirements if any, prescribed by other authorities, such as the concerned State Government, etc  However, a foreign national resident in India who is  a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank. Such requests are considered by Reserve Bank in consultation with the Government of India.

Q.8 Can an office of a foreign company purchase immovable property in India? 
 A.8. A foreign company which has established a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can  acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only  with the prior approval of Reserve Bank. Further, acquisition of immovable property by entities who had set up Branch Offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank to acquire such immovable property. However, if the foreign company has  established a Liaison Office, it can not acquire immovable property . In such cases, Liaison Offices, can take property by way of lease not exceeding 5 years. 

Q.9 Whether immovable property in India can be acquired by way of gift ?
 A.9. (a)  Yes, NRIs and  PIOs can freely acquire immovable property by way of gift either  from  
 i) a person resident in India or
ii) an NRI  or
iii) a PIO.

However, the property can only be commercial or residential. Agricultural land / plantation property / farm house in India cannotbe acquired by way of gift.
(b) A foreign national of non-Indian origin resident outside India cannot acquire any immovable  property in India through gift.

Q.10.  Whether a non-resident can inherit immovable property in India?
 A.10. Yes, a person resident outside India i.e.

i) an NRI
ii) a PIO and
iii) a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of Reserve Bank.

Q.11.  From whom can  the non-resident  inherit immovable property?
 A.11. A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from 
 (a) a person resident in India. 
(b) a person resident outside India 
 However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point of time.

II. Transfer of immovable property in India 
(i) Transfer by Sale

 Q.12 Can an NRI/ PIO/foreign national sell his residential / commercial property?

 A.12. (a)  NRI can sell property in India to-

 i)   a person resident in India or 
ii)  an NRI or 
iii) a PIO.

(b) PIO can sell property in India to 

i)   a person resident in India. 
ii)   an NRI or 
iii)  a PIO –  with the  prior approval of Reserve Bank
 (c ) Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to
 i)  a person resident in India
ii) an NRI  
iii) a PIO

Q.13. Can an agricultural land / plantation property / farm house in India owned / held by a non-resident  be sold?
 A.13. (a) NRI / PIO may sell agricultural land /plantation property/farm house to a person resident in India who is a citizen of India. 
(b)  Foreign national of non-Indian origin resident outside India would need prior approval of Reserve Bank to sell agricultural land/plantation property/ farm house in India

(ii) Transfer by gift

Q.14. Can a non-resident gift his residential / commercial property?
 A.14. Yes.
(a) NRI / PIO may gift residential / commercial property to -
 (i) person resident in India or
(ii) an NRI or 
(iii) PIO.
(b)  foreign national of non-Indian origin needs prior approval of Reserve Bank.

Q.15. Can an NRI / PIO / Foreign national holding an agricultural land / plantation property / farm house in India gift the same?
 A.15. (a) NRI / PIO can gift but only  to a person resident in India who is a citizen of  India. 
(b) foreign national of non-Indian origin needs prior approval of Reserve Bank

(iii) Transfer through mortgage
Q.16. Can residential / commercial property be mortgaged?
 A.16.   i) NRI / PIO can mortgage to:
 (a) an authorised dealer / housing finance institution in India –
without the approval of Reserve Bank.
(b) a party abroad - with prior approval of Reserve Bank.
 ii) a foreign national of non-Indian origin can mortgage only with prior approval of Reserve Bank
iii) a foreign company which has established a Branch Office or other place of business in accordance with FERA/FEMA regulations has general permission to mortgage the property with an authorized dealer in India.
             
III. Mode of payment for purchase

Q.17. How can an NRI / PIO make payment for purchase of residential / commercial property in India ?
 A.17. Payment can be made by NRI / PIO out of
(a) funds remitted to India through normal banking channel or
(b) funds held in NRE / FCNR (B) / NRO account  maintained in India 
No payment can be made either by traveller’s cheque or by foreign currency notes.
No payment can be made outside India.

Q.18 What shall be the option if there is refund of application money / payment made by the building agencies / seller because of non-allotment of flat / plot / cancellation of bookings / contracts ?
 A.18. The amount of refund, together with interest (net of income tax) can be credited to NRE account. This is subject to condition that the original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. (Please refer to  A.P. (DIR) Series Circular No. 46 dated 12.11.2002)

Q.19.  Can NRI / PIO avail of loan from an authorised dealer for acquiring flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?
 A.19. Yes, such loans are subject to the terms and conditions as laid down in Schedules 1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000 as amended from time to time.  However, banks cannot grant fresh loans or renew existing loans in excess of Rupees 20 lakh against NRE and FCNR(B) deposits either to the depositors or to third parties [cf.  A.P. (DIR Series) Circular No. 29 dated January 31, 2007].

Such loans can be repaid 
 (a) by way of inward remittance through normal banking channel or  
(b) by debit to his NRE / FCNR (B) / NRO account or 
(c) out of rental income from such property. 
(d) by the borrower's close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the  borrower's loan account. 

Repatriation:
 (a).  In case the amount has been received from inward remittance or debit to NRE/FCNR(B)/NRO account for acquiring the property or for repayment of the loan, the principal amount can be repatriated outside India.
For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency
 (b) in case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India ( as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account.
NRI/PIO are also allowed by the Authorised Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account for all bonafide purposes to the satisfaction of the authorised dealers, subject to tax compliance.

Q.20. Can NRI / PIO, avail of housing loan in rupees from an authorised dealer or housing finance institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs / renovation / improvement of residential accommodation ? How can such loan be repaid?
 A.20. Yes, NRI/PIO can avail of  housing loan in rupees from an Authorised Dealer or housing finance institution subject to certain terms and conditions. (Please refer to Regulation 8 ofNotification No. FEMA 4/2000-RB dated 3.5.2000 and A.P. (DIR) Series Circular No. 95 dated April 26, 2003).
 Such a loan can be repaid 
 (a) by way of inward remittance through normal banking channel or  
(b) by debit to his NRE / FCNR (B) / NRO account or 
(c) out of rental income from such property. 
(d) by the borrower's close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the  borrower's loan account.

Q.21. Can NRI/PIO avail of housing loan in rupees from his employer in India?
 A.21. Yes, subject to certain terms and conditions (Please refer to Regulation 8A of  Notification No. FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003).

IV Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIO

Q.22. Can NRI / PIO repatriate the sale proceeds of immovable property? If so, what are the terms?
 A.22.  NRI / PIO may repatriate the sale proceeds of immovable property in India  

(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account  
The amount to be repatriated should not exceed the amount paid for the property:

1. in foreign exchange received through normal banking channel or 
2. by debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account. 

Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties.

Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.  

(b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.

Q.23. Can an NRI/PIO repatriate the proceeds in case the sale proceed was deposited in NRO account?
 A.23. From the NRO account, NRI/PIO may repatriate up to USD one million per financial year (April-March), which would also include the sale proceeds of immovable property.  

Q.24. If a Rupee loan was taken by NRI/PIO from Authorised Dealer or housing finance institution for purchase of residential property can an NRI / PIO repatriate the sale proceeds of such property?
 A.24. Yes, provided the loan has been subsequently repaid by remitting funds from abroad or by debit to NRE/FCNR(B) accounts (Please see  A.P. (DIR) Series Circular No. 101 dated 5.5.2003)   

Q.25. If the property was purchased from foreign inward remittance or from NRE / FCNR (B) account, can the sale proceeds of property be repatriated immediately?
 A.25. Yes.

Q.26. Is there any restriction on number of residential properties in respect of which sale proceeds can be repatriated by NRI / PIO?
 A.26. Yes, sale proceeds of not more than two residential properties can be repatriated.

Q.27. If the immovable property was acquired by way of gift by the NRI/PIO, can he repatriate abroad the funds from sale?
 A.27. The sale proceeds of immovable property acquired by way of gift should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable taxes.  

Q.28 If the immovable property was received as inheritance by the NRI/PIO can he repatriate the sale proceeds?
 A.28. Yes, general permission is available to the NRIs/PIO to repatriate the sale proceeds of the immovable property inherited from a  person resident in India. NRIs/PIO may repatriate an amount not exceeding USD one million, per financial year, on production of documentary evidence in support of acquisition / inheritance of assets, an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002.   [cf. A. P. (DIR Series) Circular No.56 dated November 26, 2002].  
In case of a foreign national, sale proceeds can also be repatriated even if the property is inherited from a person resident outside India. But this is allowed only with prior approval of Reserve Bank. The foreign national has to approach Reserve Bank with documentary evidence in support of inheritance of the immovable property and the undertaking and the C.A. Certificate as mentioned above.
The general permission for repatriation of sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran and he has to seek specific approval of Reserve Bank.
As FEMA specifically permits transactions only in Indian Rupees with citizens of Nepal and Bhutan, the question of repatriation of the sale proceeds in foreign exchange to Nepal and Bhutan would not arise.     

V. Provisions for Foreign Embassies / Diplomats / Consulate Generals

Q.29. Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India ?
A.29. Yes, Foreign Embassies / Diplomats / Consulate Generals can purchase and sell any immovable property other thanagricultural land / plantation property / farm house in India with prior clearance from the Government of India, Ministry of External Affairs. The payment should be made by foreign inward remittance through normal banking channel.

VI. Other issues

Q.30. Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?
 A.30. Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank.  Rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.[cf. A.P. (DIR Series) Circular No. 45 dated May 14, 2002].

Q.31. Can a person who had bought immovable property when he was a resident, continue to hold such property even after becoming an NRI/PIO?
 A. 31. Yes, he can continue to hold the residential / commercial property / agricultural land/ plantation property / farm house in India without the approval of the Reserve Bank.

Q. 32. In which account can the sale proceeds of such immovable property be credited ? 
 A.32. The sale proceeds may be credited to NRO account.

Q.33. Can the sale proceeds of the immovable property referred to in Q.No. 31 be remitted abroad ?
 A.33. Yes, provided the amount to be remitted does not exceed USD one million per financial year, for all bonafide purposes to the satisfaction of Authorised Dealers and subject to tax compliance.

Q.34. Can foreign nationals of non-Indian origin resident in India or outside India who had earlier acquired immovable property under FERA with specific approval of Reserve Bank continue to hold the same?  Can they transfer such property?
 A.34. Yes, they may continue to hold the immovable property. However, they can transfer the property only with the prior approval of Reserve Bank.

Q.35. Is a resident in India governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000?
 A.35. A person resident in India who is a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan is governed by the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 ie. he would require prior approval of Reserve Bank for acquisition and transfer of immovable property in India even though he is resident in India. Such requests are considered by Reserve Bank in consultation with the Government in India

Definitions
Q.36.Where are the terms a `person resident in India' and a `person resident outside India' defined ?
 A.36. Section 2 (v) and Section 2 (w) of the FEMA, 1999 defines `person resident in India' and a `person resident outside India' respectively.

Q.37. What is meant by a person resident in India ?
 A.37. Under FEMA, a person resident in India is defined as a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year (April-March) and who has come to or stays in India either for taking up employment, carrying on business or vocation in India or for any other purpose, that would indicate his intention to stay in India for an uncertain period.  In other words, to be treated as `a person resident in India' under FEMA, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of the preceding financial year) but has also to comply with the condition of the purpose / intention of stay.

Q.38. What is meant by a person resident outside India ?
 A.38. The Act defines a 'a person resident outside India' as a person who is not a person resident in India' (As defined in Q.No. 37 above)

Q.39. Who can determine whether a person is resident in India or not? 
 A.39. Reserve Bank does not determine the residential status. Under FEMA, residential status is determined by operation of law. The onus is on an individual to prove his / her residential status, if questioned by any authority.

Q.40. If a foreign national is a person resident in India as per the provisions of Section 2(v) (i)B of the FEMA, 1999, does he require approval of Reserve Bank to purchase any immovable property in India ?
 A.40  A foreign national resident in India  does not require approval from Reserve Bank from FEMA angle, but approvals if any required in terms of regulations prescribed by other authorities such as the concerned State Government etc. will have to be obtained by him / her. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires specific prior approval of Reserve Bank.

 Source : RBI