By: Lalit Kumar Jain, Chairman, CREDAI
Track2Realty Exclusive: It is said that this sector encourages black money and corruption, which is sad and upsetting for all developers/entrepreneurs who put in their best efforts to run the business.
There are various critical issues in real estate development such as lack of industry status, inordinately long approval process, archaic rules and regulations, lack of affordable finance and inadequate land availability leading to high prices that hamper the credibility of the real estate sector.
One of the biggest problems that a developer faces today is on timely execution. And, this is where he gets into, not just one or two, but a host of troubles. Any delay, even if not in his control, tarnishes his image and the brand suffers.
The developer community and CREDAI have been pointing out that there are over 40 clearances that a developer is supposed to get which leads to human interaction with over 150 officials at various stages. Any delay at any stage obviously gives rise to greasing of palms as the developer is always anxious to finish his project in time and avoid delays.
Some recent developments do indicate that the government could be moving in the right direction of adopting a single window system for all real estate related clearances. Punjab has shown to the world that the single widow system can do wonders. Karnataka and Andhra may be heading in that direction. The reforms move can easily be rolled out in other States and Union Territories once the Centre issues guidelines.
We at CREDAI have suggested reforms in four key areas that impact the real estate – Administrative, Land, Tax and Banking. Experience in several countries has clearly demonstrated that real estate reforms have resulted in increased availability of housing stock that made prices stable, where as in India the serious issue of affordable housing has been reduced to a joke. Even government board built houses are beyond reach of the common man.
Real estate is a highly capital intensive industry and any delays would only add to the interest burden for developer who scrupulously tries to avoid it since the increased costs would lead to cut in is margins and rise in the cost for the customer. This again impacts the brand.
The other key factors that adversely affect the real estate sector are related to issues in land transactions, corruption related to approvals and license process, power in the hands of officials and threats to stop work, the political system and above all the taxation methodology. It is in this context that we appealed for the Prime Minister’s intervention to bring about a solution rather than indulging in a blame game.
…to be continued
