Seeking to end the curse of black money in the real estate industry, the CREDAI (Confederation of Real Estate Developers’ Associations of India) has called for the intervention of Prime Minister Dr. Manmohan Singh to chalk out ways to bring in widespread reforms.
The economic reforms initiated by Dr. Manmohan Singh as the Finance Minister over 20 years ago have seen the end of the License Raj, but the real estate sector is still governed by controls& increased controls, CREDAI National President Mr. Lalit Kumar Jain said and appealed to the Prime Minister to urgently call for discussions on comprehensive reforms for real Estate sector as well.
Commenting on the recent White Paper on Black Money’ presented by Union Finance Minister Mr. Pranab Mukherjee, CREDAI said: “It is a good attempt at focusing the nation’s attention on the issue, but it unfortunately picks on the real estate and deals with just a couple of issues like the Stamp Duty as though that is the only cause of the problem”.
Mr.Lalit Kumar Jain lamented: “The real estate developer community has become a favourite punching bag for many whenever they talk about the national curse.
“Like Mart Twain said about weather, everybody talks about black money, but nobody does anything about it” CREDAI president said.
“We too hate the system that labels us as crooks, cheats and breeders of black money,” he said and called for realizing the fact that the various bottlenecks at government level at Centre and in several States are equally responsible for this menace.
He regretted that the response has been very poor from authorities like the Environment Ministry for the realty industry suggestions for quick approvals. “We therefore, seek an immediate intervention by the Prime Minister Dr. Manmohan Singh to do justice,” he said.
Mr. Lalit Kumar Jain said: “We are victims of the system, not the Beneficiaries! We hate this system which makes us look ugly. We curse every person who exploits us to give us a legitimate permission which we deserve instantly and without any illegitimate demand.”
Restricted land use & continued pressure on land availability is also one of the root causes of high costs of inputs and the resultant sale price, he said.
“Like any prudent businessman, we are also here to make profits, otherwise it simply does not make sense for to be in the business,” he said.
The real estate developer community & 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.
CREDAI suggested reforms in four key areas that impact the real estate - Administrative Land, Tax & Banking. There has been a lot of talk on this, but no action.
Experience in many 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 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,” Mr. Lalit Kumar Jain explained.
Mr. Lalit Kumar Jain said the main factors that adversely impact 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 system. “It is in this context that we appeal for the honourable Prime Minister’s intervention to bring about a solution rather than indulging in a blame game.”
A McKinsey report to the GOI (Government of India) on cost of approval had clearly pointed out that the costs incurred on account of various approvals could constitute anything up to 40% of the sale value. Such is the enormity of the problem of approvals.
By the government’s own admission, the real estate sector in India constitutes nearly 11% of the GDP and as Mr. Mukherjee said: “a large number of transactions in the real estate sector are not reported on account of very high levels of property transaction taxes, commonly in the form of stamp duty.”
The Minister said: “Investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported. This is mainly on account of very high levels of property transaction taxes, commonly in the form of stamp duty. High transaction taxes in property are one of the biggest impediments to the development of an efficient property market.”
With rapid urbanization, the nation witnessing an ever increasing demand-supply mismatch and we developers are being blamed for an ‘artificial shortage’ of homes.
CREDAI has even suggested Special Housing Zones on lines of SEZ, but sadly there has been no movement on this. We strongly feel that the extension of facilities that are given to SEZ to even real estate could easily help in making affordable housing a reality.
“Every rupee invested in real estate sector, contributes to addition of 78 paise to GDP,” Mr. Lalit Kumar Jain said and added: “We the developer community are ready to play our role and we sincerely appeal to the governments to play the role of facilitator and not a preventer.”
The economic reforms initiated by Dr. Manmohan Singh as the Finance Minister over 20 years ago have seen the end of the License Raj, but the real estate sector is still governed by controls& increased controls, CREDAI National President Mr. Lalit Kumar Jain said and appealed to the Prime Minister to urgently call for discussions on comprehensive reforms for real Estate sector as well.
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| Mr. Lalit Kumar Jain |
Mr.Lalit Kumar Jain lamented: “The real estate developer community has become a favourite punching bag for many whenever they talk about the national curse.
“Like Mart Twain said about weather, everybody talks about black money, but nobody does anything about it” CREDAI president said.
“We too hate the system that labels us as crooks, cheats and breeders of black money,” he said and called for realizing the fact that the various bottlenecks at government level at Centre and in several States are equally responsible for this menace.
He regretted that the response has been very poor from authorities like the Environment Ministry for the realty industry suggestions for quick approvals. “We therefore, seek an immediate intervention by the Prime Minister Dr. Manmohan Singh to do justice,” he said.
Mr. Lalit Kumar Jain said: “We are victims of the system, not the Beneficiaries! We hate this system which makes us look ugly. We curse every person who exploits us to give us a legitimate permission which we deserve instantly and without any illegitimate demand.”
Restricted land use & continued pressure on land availability is also one of the root causes of high costs of inputs and the resultant sale price, he said.
“Like any prudent businessman, we are also here to make profits, otherwise it simply does not make sense for to be in the business,” he said.
The real estate developer community & 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.
CREDAI suggested reforms in four key areas that impact the real estate - Administrative Land, Tax & Banking. There has been a lot of talk on this, but no action.
Experience in many 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 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,” Mr. Lalit Kumar Jain explained.
Mr. Lalit Kumar Jain said the main factors that adversely impact 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 system. “It is in this context that we appeal for the honourable Prime Minister’s intervention to bring about a solution rather than indulging in a blame game.”
A McKinsey report to the GOI (Government of India) on cost of approval had clearly pointed out that the costs incurred on account of various approvals could constitute anything up to 40% of the sale value. Such is the enormity of the problem of approvals.
By the government’s own admission, the real estate sector in India constitutes nearly 11% of the GDP and as Mr. Mukherjee said: “a large number of transactions in the real estate sector are not reported on account of very high levels of property transaction taxes, commonly in the form of stamp duty.”
The Minister said: “Investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported. This is mainly on account of very high levels of property transaction taxes, commonly in the form of stamp duty. High transaction taxes in property are one of the biggest impediments to the development of an efficient property market.”
With rapid urbanization, the nation witnessing an ever increasing demand-supply mismatch and we developers are being blamed for an ‘artificial shortage’ of homes.
CREDAI has even suggested Special Housing Zones on lines of SEZ, but sadly there has been no movement on this. We strongly feel that the extension of facilities that are given to SEZ to even real estate could easily help in making affordable housing a reality.
“Every rupee invested in real estate sector, contributes to addition of 78 paise to GDP,” Mr. Lalit Kumar Jain said and added: “We the developer community are ready to play our role and we sincerely appeal to the governments to play the role of facilitator and not a preventer.”
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