Will DDA Delhi Housing Scheme 2014 really help Economically Weaker Section of the society?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Delhi Development Authority (DDA) has come up with another housing scheme. It is going to be the largest ever such scheme by DDA offering about 27000 apartments by July end. DDA's scheme for 2014 will have 1,500 flats on sale for the middle income group and the lower income group, which will range between Rs 30 lakh and 80 lakh. There will be 1,375 HIG (high income group) flats on offer as well. These flats start from around Rs 1 crore. The 24000 EWS (economically weaker sections) flats are expected to be priced from Rs 12 lakh onwards.

Sources said the EWS houses have been constructed this time with a "new, substantially improved pre-fabricated technology". These houses will be spread across Narela, Dwarka, Rohini and Sultangarhi.

Wow, that’s a great initiative by DDA. Wow, what a great scheme for economically weaker section of the society? Now, some of them can afford to live in national capital at affordable prices. Is it really the case? Is it really a great scheme, when mere mention of the word “SCHEME” seems to suggest a scam in the making?

Let’s analyze the DDA 2010 scheme and see if it really helped the economically weaker section of society. In 2010 scheme, about 16118 flats were auctioned. And believe it or not, some 16 lacs applications were submitted. In other words, 1 out of 100 was allocated the flat through fair and transparent draw.

To make a formal application, a 100 Rupees form was required to be submitted in 2010 with a booking amount. The booking amount differed for different categories of apartments. The applicant applying for a flat under that scheme had to deposit the registration money of `1,50,000/- or `50,000/- (Janta/ORT only) as the case may be by a Single Banker’s Cheque/ Demand Draft of any bank drawn in favor of “DDA Housing” payable at Delhi/New Delhi.

Now, we do not know how many genuine people applied for the flats and got the allocations. However, we do know that lacs of people applied for the flats in the hope that if they were allocated the apartment through lucky draw, then, they will be able to make windfall profits by selling the same in secondary market at a premium.

We met one such property dealer in Delhi and he invited all his friends and relatives to submit the application forms. He made about 8 such applications and he paid for all the expenses. He had made a deal with his friends and relatives that if any one of them was allocated a flat, then they will sell the apartment in secondary market and share the profits at 50-50. Not bad.

So, are these schemes turning out be profit making entities for middle class, upper middle class, rich section of the society? Yes, the way they are targeted, it seems, these schemes benefit the rich more than the needy.

Have a look at who all made money in 2010

• DDA by issuing a lottery system and they got about 16 lacs applications of Rs. 100 each, i.e. Rupees 16 crores.

• To make the application, people had to deposit the registration money of `1,50,000/- or `50,000. And DDA made sure that banks grant this deposit money to these people at an interest. The interest portion turned out be around Rupees 5000 or more per applicant. We don’t have the number, but it seems, lacs of people used bank’s credit to make the application. Therefore, banks made money. And it could be in 100 of crores. 

• And finally, rich participated in huge numbers in that scheme and just by getting lucky in lucky draw; they also made money by selling the flat in secondary market at a premium.

So, we just analyzed, how good or bad the DDA 2010 scheme was. It really was a SCHEME.

Why can’t DDA accept applications from needy, at least for the so called “EWS (Economically weaker section) flats”? They can easily identify an applicant by way of his/her PAN account or Aadhar account and offer the EWS flats to someone who really belongs to the EWS category.

Another way to stop speculators from entering these so called "Pro Poor" scheme is by putting a transfer cap of say 5 years. In other words, those who are allocated the flat shall not be able to sell the same in secondary market for next 5 years. This happens in many EU countries. The idea is keep speculators away from such schemes.

Let’s wait and watch for the launch of scheme in July 2014 and see if EWS flats are really meant for economically weaker section of the society or the tried & tested lottery game is again being played out.

Cheers

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