Monday Musings: Politician-builder nexus and how it works

Days before Uddhav Thackeray-led government was replaced by Eknath Shinde, then environment minister and Shiv Sena leader Aaditya Thackeray had publicly admitted that politician-builder nexus does exist in Maharashtra although according to him it was a positive one required for the revival of the realty sector in the state.

According to Aaditya, it was precisely due to this nexus that the state was able to undertake a series of steps to end the recession in the realty sector during COVID-19.

“There is a politician-builder nexus but it should be seen positively. We have been able to reduce stamp duty and premiums because of this nexus,” Thackeray junior had claimed at a programme in Mumbai in April 2022, days before Shinde carried out a coup to topple Maha-Vikas Aghadi (MVA) government.

The politician-builder nexus in large cities in India including Mumbai and Pune is not new. The latest revelation by former top police official Meeran Chadha Borwankar that how she was pressurised to complete the handover process of a three-acre prime plot belonging to Yerawada police station to a private builder Shahid Balwa who was later arrested by Central Bureau of Investigation (CBI) in 2G Spectrum case has once again underlined this.

Borwankar in her book ‘Madam Commissioner: The Extraordinary Life of an Indian Police Chief’ claimed that the then guardian minister Ajit Pawar, who is now deputy chief minister and in-charge of Pune, had insisted her to proceed to hand over three-acre prime urban land belonging to Yerawada police station to the highest bidder. Borwankar refused to complete the process and became the reason for the ire of the minister for a government plot, whose current market price is estimated to be around ₹200 crores.

The deal was lucrative for Balwa as his firm owned a neighbouring plot where a tower was being planned. The three acres next to it would have allowed him to make the project bigger.

Ajit Pawar has denied the charges but this is not the only example in a state where land is scarce and is important raw material for the real estate industry, housing, offices and malls.

In 2016, then Maharashtra revenue minister Eknath Shinde had to quit the cabinet due to his alleged role land deal. Khadse was accused of buying a three-acre plot “reserved” for Maharashtra Industrial Development Corporation (MIDC) in Bhosari, near Pune allegedly at less than one-sixth of its market value from the original owner.

Whether it’s politicians or real estate developers with resources, finance and inside information often look for lucrative land deals. In the case of Khadse, the purchase — in the name of the ex-minister’s wife and son-in-law — was made for ₹3.75 crore while the land is reportedly worth ₹60 crores in compensation under the new land acquisition law.

In the Yerawada police land case too, it was being sold to a private builder at a price far less than market value with officers and minister joining hands, as alleged by Borawankar in her book.

There was another real estate-related scandal which cost Congress leader Ashok Chavan his chief ministership. In Adarsh Housing, besides Chavan, many politicians, and bureaucrats acquired apartments for themselves and their family members when the land was approved for Kargil war widows. With their cumulative influence, the nexus bent several rules.

More than 25 years ago a highly controversial building at Pune’s Prabhat Road had become the reason for the political downfall of former chief minister Manohar Joshi.

The 10-storey apartment ‘Sundew’ in the city’s up-market area stood as a classic example of misuse of power by mighty public figures such as Joshi.

Joshi’s son-in-law and highly influential builder Girish Vyas constructed Sundew during the 1990s when Shiv sena-BJP combine was in power. Vyas Construction, owned by Joshi’s son-in-law, illegally erected 24 flats on 30,000 square feet plot, originally meant for a school as per the reservation guidelines laid out in the Development Plan (DP).

Joshi in his capacity as chief minister with an additional in-charge of the urban development ministry, changed the reservation on the plot and shifted it to another site beyond 200 meters. This way Joshi violated the Bombay Provincial Municipal Corporation Act, 1949, kicking up a major political storm that eventually resulted in Joshi’s resignation in 1999.

The politicians, as indicated in many other cases in the past, pass on money to developers who use contacts of the former to construct homes or offices and sell it at higher prices to make more money that both builders can put back in business while politicians in elections and to expand his control.

The Benami Transactions (Prohibition) Act empowers investigating agencies to summarily take over a property if it is proved to be ‘benami’, or is nominally in a particular person’s name while having been paid for and actually belonging to another. It is for the same reasons, that politicians or bureaucrats allow builders to be the face of such deals.

The real estate business is where prices are held by politicians sitting on land releases for development till builders make their profits. The nexus between politicians and builders is clear. To get the real estate sector going, this nexus needs to be broken. Real buyers will not emerge in viable numbers till this happens.