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GS Paper: GS3

  • UK to issue Open General Export Licence (OGEL) to India

    In the backdrop of the rapid geopolitical turmoil, PM Modi and his British counterpart Boris Johnson agreed on a new and expanded India-UK defence partnership and vowed to seal an ambitious free trade agreement by the end of the year.

    What is the news?

    • The UK is creating an Open General Export Licence (OGEL) for India to reduce bureaucracy and slashing delivery times for defence procurement.
    • It will partner with India on new fighter jet technology as well as in the maritime sphere to detect and respond to threats.

    What is OGEL?

    • The open General Licence is a type of license that is used for the export license that is issued by the government for domestic suppliers.
    • The items that are to be exported in India are categorised into three types. They are prohibited items, restricted items, and freely importable items. These classifications are made based on the nature and use of the products.
    • The application processing and grant of OEGL will be taken care of by the Department of Defence Production. The process will vary for each case.
    • The primary aim of the OEGL is to give a boost to the defence exports of India. This will also improve the ease of doing business and imports and exports.
    • The countries allowed under the OGELs are: Belgium, France, Germany, Japan, South Africa, Spain, Sweden, UK, USA, Canada, Italy, Poland and Mexico.

    Items to be exported

    • The items permitted under OGEL includes components of ammunition & fuse setting device without energetic and explosive material; firing control & related alerting and warning equipment & related system; and body protective items.
    • Complete aircraft or complete unmanned aerial vehicles (UAVs) and any components specially designed or modified for UAVs are excluded under this license.

     

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  • Special Purpose Acquisition Companies (SPACs)

    The government is reportedly considering a regulatory framework for special purpose acquisition companies (SPACs) to lay the ground for the possible listing of Indian companies through this route in the future.

    What are SPACs?

    • An SPAC, or a blank-cheque company, is an entity specifically set up with the objective of acquiring a firm in a particular sector.
    • They aim to raise money in an initial public offering (IPO) without any operations or revenues.
    • The money that is raised from the public is kept in an escrow account, which can be accessed while making the acquisition.
    • If the acquisition is not made within two years of the IPO, the SPAC is delisted and the money is returned to the investors.
    • While SPACs are essentially shell companies, a key factor that makes them attractive to investors are the people who sponsor them.
    • Globally, prominent celebrities have participated in SPACs.

    Why in news?

    • According to reports, the Company Law Committee was set up in 2019 to make recommendations to boost ease of doing business in India.
    • This committee has made this suggestion regarding SPACs in its report submitted to the government recently.
    • The concept of SPAC has existed for nearly a decade now, and several investors and company promoters have used this route to take their investments public.
    • The vehicle gained momentum in 2020, which was a record year for SPAC deals; this record was broken in 2021.

    Where does India stand?

    • Early last year, renewable energy producer ReNew Power announced an agreement to merge with RMG Acquisition Corp II, a blank-cheque company.
    • This became the first involving an Indian company during the latest boom in SPAC deals.
    • As things stand now, the Indian regulatory framework does not allow the creation of blank cheque companies.
    • The Companies Act, 2013 stipulates that the Registrar of Companies can strike off a company if it does not commence operations within a year of incorporation.

    Risk factors around SPACs

    • The boom in investor firms going for SPACs and then looking for target companies have tilted the scales in favour of investee firms.
    • This has the potential, theoretically, to limit returns for retail investors post-merger.
    • SPACs are mandated to return money to their investors in the event no merger is made within two years.
    • However the fineprint of several SPAC prospectuses shows that certain clauses could potentially prevent investors from getting their monies back.
    • Historically, though, this has not happened yet.

     

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  • New research about Jupiter’s moon Europa

    A team of researchers from Stanford University have said that on one of Jupiter’s moons Europa, a prime candidate for life in the solar system might have abundance of water pockets beneath formations called double ridges.

    About Europa

    • Europa is slightly smaller than Earth’s moon and its diameter is about one-quarter that of the Earth.
    • Even though Europa has a very thin oxygen atmosphere, it is considered one of the most promising places in the solar system to find present-day environments that are suitable for life beyond the Earth.
    • It is also believed that underneath Europa’s icy surface the amount of water is twice that on Earth.
    • NASA notes that scientists believe Europa’s ice shell is 15-25 km thick and is floating on an ocean, which is estimated to be 60-150 km deep.
    • Interestingly, while its diameter is less than the Earth’s, Europa probably contains twice the amount of the water in all of the Earth’s oceans.
    • NASA is expected to launch its Europa Clipper in 2024.
    • The module will orbit Jupiter and conduct multiple close flybys to Europa to gather data on the moon’s atmosphere, surface and its interior.

    What is the new finding?

    • It is already known that Europa, whose surface is mostly solid water ice, contains water beneath it.
    • The researchers are now saying that the double ridges – the formations which are most common on Europa’s surface and are similar to those seen on Earth’s Greenland ice sheet .
    • They are formed over shallow pockets of water.

    Significance of the recent findings

    • The central implication is that the shallow water pockets beneath the double ridge increase the potential habitability of the moon.
    • The ice shell, which is potentially miles thick, has been a difficult prospect for scientists to sample.
    • But according to the new evidence, the ice shell is believed to be less of a barrier and more of a dynamic system.
    • This means that the ice shell does not behave like an inert block of ice, but rather undergoes a variety of geological and hydrological processes.
    • This suggests active volcanism and thus a possibility for life.

     

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  • Russia’s new nuclear missile ‘Sarmat’

    Amidst stiff resistance from Ukraine in the ongoing war and harsh sanctions imposed by the West, Russia went ahead and tested its new Inter Continental Ballistic Missile (ICBM) Sarmat.

    What is Sarmat?

    • The RS-28 Sarmat (NATO name Satan-II) is reported to be able to carry ten or more warheads and decoys
    • It has the capability of firing over either of the earth’s poles with a range of 11,000 to 18,000 km.
    • It is expected to pose a significant challenge to the ground-and-satellite-based radar tracking systems of the western powers, particularly the USA.
    • The ten warheads are Multiple Independently-Targetable Re-entry Vehicles and each has a blast yield of .75 MT.
    • The Sarmat will also be the first Russian missile which can carry smaller hypersonic boost-glide vehicles. These are manoeuvrable and hard to intercept.
    • It is a liquid-fuelled missile as compared to US ICBMs which have moved on to solid fuel systems.

    Who is it named after?

    • The Sarmat is named after nomadic tribes that roamed the steppes of present-day Southern Russia, Ukraine and Kazakhstan in the early medieval period.
    • Sarmatians were highly developed in horsemanship and warfare.
    • It goes on to say that the administrative capabilities and political expertise of Sarmatians contributed to their gaining widespread influence and by the 5th century BC.
    • They held control of the land between the Urals and the Don River.
    • In the 4th century they crossed the Don and conquered the Scythians, replacing them as rulers of almost all of southern Russia by the 2nd century.

    Was Russia known to be developing this missile?

    • It was widely known that Russia was developing a new ICBM to replace its older ones.
    • An announcement in this regard was made by Vladimir Putin in 2018 while making his State of the Nation address to the Federal Assembly.
    • He had stated at the time that the first Regiment fully armed with Sarmat ICBM will be operational by the end of 2022.
    • The deteriorating relations between Russia and the Western Powers is said to have given an impetus to its development.

     

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  • How the Central and State governments procure Wheat?

    Wheat procurement is now underway in various states of the country.

    Wheat Procurement in India

    • The main purpose of procuring for the central pool is ensuring the MSP as well as the country’s food security by making food available to the weaker sections at affordable prices.
    • The Centre procures wheat by paying the minimum support price (MSP) announced for the crop.
    • The States do it under two systems:
    1. The centralised one, also called the non-decentralised procurement system (non-DCP) and
    2. The decentralised one, also called DCP

    (1) Non-DCP

    • Under this system, the Food Corporation of India (FCI) directly or through state government agencies procure wheat from the purchase centres established across the states based on various parameters like moisture, lustre, broken/shrivelled etc.
    • In Punjab and Haryana, farmers sell their crop to the central agency or state agencies through Arhtiyas (commission agents).
    • The wheat procured by the state agencies is handed over to the FCI for storage or for transportation to the consuming states.
    • The FCI, which is the central nodal agency for wheat procurement, pays the cost of procured wheat to the state agencies.

    (2) DCP

    • The decentralised system was brought in the late 1990s to promote local procurement and save the transportation cost and time.
    • The state government or its agencies procure, store and distribute wheat against the Centre’s allocation for targeted PDS and other weaker sections etc. with the state.
    • The excess stocks procured by the state and its agencies are handed over to the FCI for the central pool.
    • The expenditure incurred by the state government on the procurement, storage and distribution of stocks under the decentralised system are reimbursed by the Centre.

    Role of Arhtiyas

    • Apart from paying the MSP, the Centre also reimburses the arhtiyas’ commission, administrative charges, mandi labour charges, transportation charges, custody and maintenance charges, interest charges, the gunny bag cost and statutory taxes.
    • The cost of excess stocks handed over to the FCI is reimbursed to the state government or agencies as per the Centre’s policies.
    • Procurement agencies ensure that the stocks brought to mandis are purchased as per the specifications fixed by the government and farmers are not compelled to sell their crop below the MSP.
    • But if a farmer gets a better price from private players, he can sell to them.

    From how many states is wheat procured for the central pool?

    • There are 15 states on the procurement list for the central pool, but the contributions from seven of the states are negligible.
    • Only Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan are the main contributors to the central pool.
    • Bihar also contributed to some extent in the last season.

    How much wheat is procured for the central pool by the FCI every year?

    • According to the records of the FCI, from 2011 to 2021, procurement for the central pool was between 25-40 per cent of the total wheat production.
    • The procurement has doubled in the past one decade as 22.5 million tonnes of wheat was procured in 2011 and 43.3 million in 2021.
    • The current season of procurement is going on.

    What is the procurement scale against the total production of wheat in India?

    • In 2011 the total production of wheat was 88 million tonnes while it was around 109 million tonnes in 2021.
    • And the government’s procurement was 26 per cent and around 40 per cent in 2011 and 2021 respectively.
    • The procured grain is used for export purposes, the public distribution system and maintaining a particular stock for an emergency period.
    • The remaining 60 per cent of the production goes to the bakery industry and other wheat-related businesses.
    • Farmers also keep some of this wheat for their self-consumption.

    What is the share of wheat contribution of various states to the central pool?

    • Barring 2020, Punjab has been the number one wheat contributor to the central pool.
    • The state has increased its contribution from 102.09 lakh tonnes in 2011 to 132. 22 lakh tonnes in 2021.
    • Haryana has also increased its contribution from 63.47 lakh tonnes to around 84.93 lakh tonnes in the same period.
    • Madhya Pradesh’s contribution was 35.38 lakh tonnes in 2011, which jumped to the highest among all states—129.42 lakh tonnes—in 2020 and was 128.16 lakh tonnes last year.
    • Uttar Pradesh’s contribution increased from 16.45 lakh tonnes to 56.41 lakh tonnes, and Rajasthan’s contribution rose from 4.76 lakh tonnes to 23.40 lakh tonnes in the same period.

    Note: Punjab (despite its small size compared to MP, UP) is also the leading wheat producer state in India.

    Back2Basics: Minimum Support Price (MSP)

    • MSP is a form of market intervention by the GoI to insure agricultural producers against any sharp fall in farm prices.
    • The MSP are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • MSP is price fixed to protect the producer – farmers – against excessive fall in price during bumper production years.
    • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
    • The minimum support prices are a guarantee price for their produce from the Government.
    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

    Methods of calculation

    • In formulating the level of MSP and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
    • The CACP makes use of both micro-level data and aggregates at the level of district, state and the country.
    • Other factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.

    Procurement agencies

    • Food Corporation of India (FCI) is the designated central nodal agency for price support operations for cereals, pulses and oilseeds.
    • Cotton Corporation of India (CCI) is the central nodal agency for undertaking price support operations for Cotton.

     

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  • INS Vagsheer: Key features, capabilities

    The sixth and last of the French Scorpene-class submarines, INS Vagsheer, was launched into water at the Mazagon Docks in Mumbai.

    Launch of INS Vagsheer

    • It was launched by Veena Ajay Kumar (wife of Union Defence Secretary), in keeping with the naval tradition of launch and naming by a woman.
    • The six submarines were being built under Project-75 by the Mazagon Docks under technology transfer from the Naval Group as part of a $3.75-billion deal signed in October 2005:
    1. INS Kalvari was commissioned in December 2017;
    2. INS Khanderi in September 2019;
    3. INS Vagir in November 2020;
    4. INS Karanj in March 2021; and
    5. INS Vela in November 2021.
    • P 75 is one of two lines of submarines, the other being P75I, as part of a plan approved in 1999 for indigenous submarine construction with technology taken from overseas firms.

    Why ‘Vagsheer’

    • Vagsheer is named after the sand fish, a deep sea predator of the Indian Ocean.
    • The first submarine Vagsheer, from Russia, was commissioned into the Indian Navy on December 26, 1974, and was decommissioned on April 30, 1997.
    • The new Vagsheer will be officially named at the time of its commissioning.

    Specifications

    • Vagsheer can take up to eight officers and 35 men.
    • It is 67.5 metres long and 12.3 metres high, with a beam measuring 6.2 metres Vagsheer can reach top speed of 20 knots when submerged and a top speed of 11 knots when it surfaces
    • It has four MTU 12V 396 SE84 diesel engines, 360 battery cells for power, and a silent Permanently Magnetised Propulsion Motor.
    • The hull, fin and hydroplanes are designed for minimum underwater resistance and all equipment inside the pressure hull is mounted on shock-absorbing cradles for enhanced stealth.

    Features

    • Vagsheer is a diesel attack submarine, designed to perform sea denial as well as access denial warfare against the adversary.
    • It can do offensive operations across the spectrum of naval warfare including anti-surface warfare, anti-submarine warfare, intelligence gathering, mine laying and area surveillance.
    • It is enabled with a C303 anti-torpedo counter measure system.
    • It can carry up to 18 torpedoes or Exocet anti-ship missiles, or 30 mines in place of torpedoes.
    • Its superior stealth features include advanced acoustic absorption techniques, low radiated noise levels, hydro-dynamically optimised shape.
    • It has the ability to launch a crippling attack using precision guided weapons, underwater or on surface.

    Road ahead

    • Vagsheer will be commissioned into the Indian Navy’s Western Command after 12 to 18 months when sea trials end.
    • It will be based with Western Naval Command, mostly in Mumbai.
    • The submarine will undergo a very comprehensive and rigorous set of tests and trials, for more than a year, to ensure delivery of a fully combat worthy submarine.

    Back2Basics: Various classes of Submarines in India

    In maritime terms, a class of ships is a group of vessels that have the same make, purpose and displacement.

    • Chakra Class: Under a 10-year lease from Russia since 2012
    • Arihant Class: Nuclear-powered ballistic missile submarines
    • Shishumar Class: Diesel-electric attack submarines Indian variant of the Type 209 submarines developed by the German Navy
    • Kalvari Class: Diesel-electric attack submarines designed by French company DCNS
    • Sindhughosh Class: Kilo-class diesel-electric submarines built with the help of Russia
    • Scorpene-Class: French submarines that can undertake various types of missions such as anti-surface warfare, anti-submarine warfare, intelligence gathering, mine laying, area surveillance etc.

     

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  • ISRO develops Space Bricks from Martian Soil

    Researchers from the Indian Space Research Organisation (ISRO) and the Indian Institute of Science (IISc) have developed a way to make bricks from Martian soil with the help of bacteria and urea.

    Space Bricks

    • ISRO and IISc have collaborated to develop a novel scalable technique of manufacturing space bricks using Martian Simulant Soil (MSS).
    • The team first made the slurry by mixing Martian soil with guar gum, a bacterium called Sporosarcina pasteurii, urea and nickel chloride (NiCl2).
    • This slurry can be poured into moulds of any desired shape, and over a few days the bacteria convert the urea into crystals of calcium carbonate.
    • These crystals, along with biopolymers secreted by the microbes act as cement holding the soil particles together.
    • This method ensures that the bricks are less porous, which was a problem with other methods used to make Martian bricks.
    • The bacteria seep deep into the pore spaces, using their own proteins to bind the particles together, decreasing porosity and leading to stronger bricks.

    Their significance

    • In the past, the team had made bricks out of lunar soil using a similar method.
    • These ‘space bricks’ can be used to construct building-like structures on Mars that could facilitate human settlement on the red planet.

     

     

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  • India’s Crude Oil Imports from OPEC

    OPEC’s share of India’s oil imports for the FY22 financial year remained almost steady year-on-year, arresting sharp declines over the past six years, as refiners prefer crude from West Asia to counter rising global prices.

    India’s crude oil imports from OPEC

    • OPEC oil accounted for about 88% of India’s crude imports in FY08.
    • Its share of India’s overall imports could decline because refiners in Asia’s third-largest economy are buying cheaper Russian oil.
    • However, Russian oil continued to account for less than 1% of India’s crude imports in FY22.

    What is OPEC?

    • OPEC stands for Organization of the Petroleum Exporting Countries.
    • It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.

    What is OPEC+?

    • The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
    • OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
    • Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

    Why OPEC plus came into existence?

    • When Russia concluded the Vienna Agreement in 2016, the Russian leadership believed that it would help prepare the country for the Russian presidential elections in March 2018.
    • Higher oil prices ensured the Kremlin’s financial capacity to lead a successful electoral campaign.
    • This changed the regime’s priorities – from satisfying the needs of the general population to ensuring the sustainability of the Kremlin’s alliance with powerful tycoons, including that controlling oil production.
    • For Saudi Arabia, turning what had been an ad hoc coalition into a formal group provides a hedge (protection) against future oil-market turbulence.
    • For Russia, the formalization of the group helps expand Putin’s influence in the Middle East
    • However, both reportedly aimed at causing a drop in oil prices in order to hit US shale producers, who have continued to benefit from OPEC production cuts by expanding their market share.

    Try this PYQ:

    Q.The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of

    (a) Crude oil

    (b) Bullion

    (c) Rare earth elements

    (d) Uranium

     

    [wpdiscuz-feedback id=”fozewnon7k” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Cryptos and a CBDC are not the same thing

    Context

    Cryptocurrency will be discouraged via taxation and capital gains provisions. This was the message from the Finance Minister during the Budget discussion in Parliament.

    Growing worry about the cryptocurrencies

    • The Governor of the Reserve Bank of India, in February, highlighted two things.
    • First, “private cryptocurrencies are a big threat to our financial and macroeconomic stability”.
    • Second, “these cryptocurrencies have no underlying (asset).
    • Clearly, statements from the RBI indicate a growing worry since the proliferation of cryptos threatens the RBI’s place in the economy’s financial system.
    • This threat emerges from the decentralised character of cryptos based on blockchain technology which central banks cannot regulate and which enables enterprising private entities to float cryptos which can function as assets and money.
    • The total valuation of cryptos recently was upward of $2 trillion — more than the value of gold held globally.
    • Challenges in banning it: Cryptos which operate via the net can be banned only if all nations come together.
    • Even then, tax havens may allow cryptos to function, defying the global agreement.

    Crypto as currency

    • A currency is a token used in market transactions. 
    • Historically, commodities (such as copper coins) have been used as tokens since they themselves are valuable.
    • But paper currency is useless till the government declares it to be a fiat currency.
    • Paper currency derives its value from state backing.
    • Cryptos are a string of numbers in a computer programme. And, there is no state backing. 
    • Their acceptability to the well-off enables them to act as money.
    • So, cryptos acquire value and can be transacted via the net.
    • This enables them to function as money.
    • Solving the problem of double spending:  Fiat currency has the property that once spent, it cannot be spent again except through forgery, because it is no more with the spender.
    • But, software on a computer can be used repeatedly.
    • Blockchain and encryption have solved the problem by devising protocols such as ‘proof of work’ and ‘proof of stake’. 

    Why CBDC is not a solution

    • A Central Bank Digital Currency (CBDC) will not solve the RBI’s problem since it can only be a fiat currency and not a crypto.
    • Blockchain enables decentralisation.But, central banks would not want that.
    • Further, central bank would want a fiat currency to be exclusively issued and controlled by them.
    • But, theoretically everyone can ‘mine’ and create crypto.
    • So, for the CBDC to be in central control, solving the ‘double spending’ problem and being a crypto (not just a digital version of currency) seems impossible.
    • Validating transaction: A centralised CBDC will require the RBI to validate each transaction — something it does not do presently.
    • Once a currency note is issued, the RBI does not keep track of its use in transactions.
    • Keeping track will be horrendously complex which could make a crypto such as the CBDC unusable unless new secure protocols are designed.

    Conclusion

    CBDCs at present cannot be a substitute for cryptos that will soon begin to be used as money. This will impact the functioning of central banks and commercial banks.

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  • RERA

    The Supreme Court has asked the Chief Secretaries of the States to respond to queries raised by the Centre on the implementation of rules framed under the Real Estate (Regulation and Development) (RERA) Act, 2016 in their respective jurisdictions.

    What is RERA, 2016?

    • The Real Estate (Regulation and Development) Act, 2016 seeks to protect home-buyers as well as help boost investments in the real estate industry.
    • It establishes a Real Estate Regulatory Authority- RERA in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute resolution.
    • It was enacted under Entry 6 and 7 (dealing with contracts and the transfer of property) of the Concurrent List.
    • It is followed by the principle “buyer is the king and builders will have to ensure compliances to avoid punishment”.
    • Its main objective is to reduce delay in the work or timely delivery of the project without compromising the quality.

    Objectives of this Act

    It has the following objectives:

    • To protect the interest of the allottees and ensure their responsibility
    • To maintain transparency and reduce the chances of fraud
    • To implement Pan-India standardization and bring about professionalism
    • To enhance the flow of correct information between the home buyers and the sellers
    • To impose greater responsibilities on both the builders and the investors
    • To enhance the reliability of the sector and thereby increase confidence amongst the investors

    Key Provisions of RERA Act

    • Compulsory registration: According to the central act, every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA.
    • Establishment of state level regulatory authorities: It provides for State governments to establish more than one regulatory authority such as RERA to:
    1. Register and maintain a database of real estate projects; publish it on its website for public viewing
    2. Protection of interest of promoters, buyers and real estate agents
    3. Development of sustainable and affordable housing
    4. Render advice to the government and ensuring compliance with its Regulations and the Act
    • Establishment of Real Estate Appellate Tribunal: Decisions of RERAs can be appealed in these tribunals.
    • Mandatory Registration: All projects with plot size of a minimum 500 sq.mt or eight apartments need to be registered with Regulatory Authorities.
    • Deposits: Developers needs to keep 70% of the money collected from a buyer in a temporary pass through account held by a third party (escrow account) to meet the construction cost of the project.
    • Liability of the developer: A developer’s liability to repair structural defects would be for 5 years.
    • Cap on Advance Payments: A promoter cannot accept more than 10% of the cost of the plot, apartment or building as an advance payment or an application fee from a person without first entering into an agreement for sale
    • Carpet Area over super built-up: Clearly defines Carpet Area as net usable floor area of flat. Buyers will be charged for the carpet area and not super built-up area.
    • Punishment for non-compliance: Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.

    Which projects can get RERA approval?

    • Commercial and residential projects including plotted development.
    • Projects measuring more than 500 sq mts or 8 units.
    • Projects without Completion Certificate, before the commencement of the Act.
    • The project is only for the purpose of renovation/repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA.
    • Each phase is to be treated as standalone real estate project requiring fresh registration.

    Benefits offered by the RERA Act

    Industry

    Developer

    Buyer

    Agents
    • Governance and transparency
    • Project efficiency and robust project delivery
    • Standardization and quality
    • Enhance the confidence of investors
    • Attract higher investments and PE funding
    • Regulated Environment
    • Common and best practices
    • Increase efficiency
    • Consolidation of sector
    • Corporate branding
    • Higher investment
    • Increase in organized funding
    • Significant buyers protection
    • Quality products and timely delivery
    • Balanced agreements and treatment
    • Transparency – sale based on carpet area
    • Safety of money and transparency on utilization
    • Consolidation of the sector (due to mandatory state registration)
    • Increased transparency
    • Increased efficiency
    • Minimum litigation by adopting best practices

     

     

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