By: Ravi Sinha
Real Estate may boast off to be the second largest economic activity and the largest employment provider in the economy, but when it comes to have a say in the policy making, they are found to be sulking. The Finance Minister consults the industries and industrial bodies before the Union Budget every year, but the sector feels grossly ignored and a victim of bias for the under representation of the sector in the budget.
Real Estate, after all, is not accorded to be an industry and the sector is actually not even properly represented in the industrial bodies as well. The fact that their business is a state subject and among them has hardly been a consensus over its issues and concerns makes the matter even worst for the sector. Their own bodies like NAREDCO and CREDAI often only proposes and gets disposes.
However, Navin M Raheja, Managing Director of Raheja Developers categorically blames the Finance Minister for ignoring the requirements of the sector. He says, “Finance Minister feels that incase tax sops are given to real estate, the Government may end up losing substantial revenues. But we feel this will increase the revenue if steps are taken for the growth of the industry as there is backward and forward linkage of more than 250 industries which includes steel, cement, electronic, infrastructure, hospitality, industrial development, banking, creation of disposable income and will also increase the employment in the country”.
Raheja’s grouse seems to be the buzz word of the industry. Facts speak for themselves. As per a survey among 100 real estate developers by Track2Realty, a real estate market tracker, nearly all the real estate developers, a whopping 96 per cent, across the country are cribbing for the sectors’ continued under representation in the Union Budget over the years. The level and degree of dissatisfaction, however, varies from very dissatisfied (42 per cent) to being dissatisfied (30 per cent) and relatively dissatisfied (28 per cent).
84 per cent of the developers blame squarely on the Finance Minister for the wide gap between theory and practice when it comes to granting the legitimate needs of the sector. Only a poor eight per cent say that the sector has been consulted by the Finance Minister over its legitimate issues and concerns through the industrial bodies. Others are not sure about it.
90 per cent feel the benefits of the Government’s focus on infrastructure development goes to the allied sectors like steel & cement and there is a deliberate raw deal to the sector. 30 per cent of the developers see no chance of their needs being addressed in the Union Budget this time too, while another 45 per cent see a very low chance and the rest 25 per cent are not sure about what will come out of the Pranab Mukherjee’s Budget Box for the sector this year.
Atul Modak, Head of Kohinoor City goes a step further to say realty sector not only gets under represented but also it is treated with a bias. “Instead of seeing it as one of the sector responsible for growth of the economy, it is looked with a bias and taxed accordingly,” he says.
Manoj John, Vice President, Corporate Planning and Strategy, RNA Corp repents that central policy support is lacking even in the areas where the developers have been catalyst to the green building benefits in the residential sector. He says, “Despite engaging in sustained activity around Green Buildings on various international & national forums, specific incentive program for adopting cleaner technologies, material and methods have not been supported in residential sector through policy intervention. There are state level concessions on property tax (like commercial properties in Maharashtra) but central policy support is much lacking”.
Kamal Khethan, Chairman & MD, Sunteck Realty agrees that even though a lot is written up and contemplated, the government does not have specific tax benefits or policies for accounting towards the higher costs incurred in Green Buildings. “To enable a sustainable Green Building policy, our Government could benchmark with similar apex bodies as in Singapore Green Building Council and provide a structured approach through higher levels of depreciation and tax breaks for certified Green Buildings,” he says.
Jitendra Jain, Managing Director, Neev Group of Companies is equally critical when he says that he is dissatisfied with the focus of budget on realty sector in the last ten years. “Our expectations have never been fulfilled. The problem is that the Finance Minister has not consulted the sector representatives about our wish list and we could not meet him for the same. I am not sure how much is he receptive about the sectors issues and concerns. With this background there is a moderate chance of the budget offering something substantial to the realty sector. We continue to remain under represented in successive budget,” he says.
Uday Dharmadhikari, CEO, Usha Berco Realty says that the allied sectors like steel, cement and others get more patient hearing and their issues addressed in budget than realty. “I am not sure about the Union Budget addressing the concerns of the sector this year. We continue to remain under represented in successive budget. We are deliberately getting a raw deal in each budget. To a large extent the sector has failed to make a consensus over its legitimate expectations with the budget,” he says.
The above view is accepted by most of the realtors. Even though they sulk under representation in the Union Budget year after year, they admit that the sector is not very organized to create consensus over its legitimate issues. To a large extent real estate being a state subject makes it neglected in the budget. They all agree with the fact that the sector needs to organize itself to be given adequate representation in budget. The disorganized nature of the business has made realty sector failing to project a face of the industry.
