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The ban on illegal sand mining may hurt the real estate sector which is already battling a phase of slowdown.
Realty projects might be delayed further as the ban would impact the availability of a major raw material -- sand. According to developers, who wished to remain anonymous, illegal sand is widely used across real estate projects as it brings down the overall cost by about 10-15%.
The immediate impact would be felt on progress of projects. In longer term, the developers might be forced to procure sand legally, which would increase the costs for them and might have a repercussion on prices as well later, a developer based in North India said.
Real estate consultancy firm JLL’s research head Ashutosh Limaye said, "In short term, the cost of construction is expected to go up. While in the longer run, there would not be much of an impact as developers can plan their projects accordingly after this development.”
Developers might want to shift to other available alternatives to sand such as concrete blocks, he said.
Real estate sector is witnessing low sales and huge inventory pile up because of the slowdown. Despite this, there have been no direct price cuts by developers but only offers such as free gold coin, car, free registration and stamp duty with booking of a flat.
Meanwhile, a senior environment ministry official clarified that it is state government clearances that would be necessary for sand mining below 5-hectare plots.
“It would be difficult for the Centre to monitor such huge areas and small projects. It would be the concerned state governments that may be looking into it,” a senior ministry official told Business Standard.
Yesterday, the National Green Tribunal (NGT) banned mining or removal of sand from river beds across the country without an environmental clearance. Sand is a major raw material for construction sector, which mainly includes real estate. In February, the apex court had ordered mandatory environment clearances from environment ministry on all excavation of minerals, including sand mining.
Illegal sand mining is rampant in parts of Uttar Pradesh, Uttarakhand and Madhya Pradesh.
The issue came to light when the Uttar Pradesh government suspended IAS officer Durga Shakti Nagpal, who was responsible for the arrest of 15 people and had imposed a fine of Rs 2 crore on the illegal sand miners in Gautam Budh Nagar. The flying squads formed by Nagpal had seized 24 dumpers and 300 trolleys which were used by sand mafias. Following the political storm over Nagpal’s suspension environment minister Jayanti Natarajan had come out in public saying that the ministry would conduct an independent enquiry into the incident.
