by Dr.K.R.THOOYAVAN, Our Building and Construction
The Tenth Five
Year Plan (2002-2007) recorded the highest average GDP growth rate of 7.6%
expected to grow at 9.3% in the first
year of XI plan (2007-2012),
but not happened. The period of 2008 onwards
the economy moved very slow, as it happened in the U.S and elsewhere.
The Key focus of the union budget
2013-14 has been to bring back the Indian Economy to the high growth path. By
and large the Union Budget 2013-14 was a combination of welfare oriented and
fiscal
prudence measure.
The
government has been able to contain the fiscal deficit
at 5.2 % of GDP as
against the revised target of 5.3% for the
current fiscal. In line with concern over the twin deficits, the Government
aimed to contain the fiscal deficit at 4.8% in
FY 2013-14, by rationalizing
its expenditure plans and bridge to current account
deficit by encouraging Foreign Capital inflows.
Ultimately , the Union Budget
seems to be a statement of intent about the path that the Government
proposes
to transverse in order to rejuvenate and sustain economic growth impulses. The
intentions of
the
budget proposals –such as the need to attain fiscal
consolidation, widen the
tax base, provide impetus to economic growth, ensure inclusive economic
development and cut the wasteful and avoidable spending and expendituresare
indeed commendable.
Construction Federation of India (CFI)
states it is a “Positive” budget for Road and Infrastructure;
however it does not include the housing related
infrastructure materials and industry.
The GDP for the current Financial year is not likely to cross 5.7-5.9 mark. The highest
average GDP 7.6% expected to grow at 9.3% has dropped down. Hence the
predicted 8% in GDP growth
is highly unrealistic.
Hence there is need for relooking at the budget and bring effective measures
to
remedy the situation.
 |
| Dr.K.R.THOOYAVAN, Our Building and Construction |
The macro-economic concerns are having a cascading effect on Indian Real Estate. The following
are the important aspirations from the stake-holder of real estate
development which need to be looked into and incorporation in the upcoming
budget.
• Reduce High Cost Of
Borrowing:
Presently, interest rates
charged by the banks to developers and home buyers are at an
all-time peak and need to be brought down. The
regulatory and monetary authorities need to
bring down the housing loan rates to provide affordable housing to
more cities and towns.
• Grant Real Estate
Infrastructure Status:
To date, the only
industries that have enjoyed infrastructure status were road and highway
construction, ports, airports, rapid public transport systems, and so on.
Real estate was not granted infrastructure status, despite the
fact that it is a significant growth driver
for the economy, generating countless jobs and directly catering to the needs of
individuals and the businesses in which they work and which they patronize. Real estate is
infrastructure in the truest sense, as it deals with building the very
framework of the nation and its economy. This is why it should be granted infrastructure
status
and be given the benefits
of this status.
• Increase Infrastructure
Allocations:
The budget needs to increase infrastructure spending in urban
areas with a view to unlocking the value of neglected and hidden land assets in
suburban and peripheral districts.
• Provide Real Estate With
Industry Status:
The country’s real estate
industry contributes approximately 5% to the GDP. Moreover, the
real estate sector has grown significantly
over the past decade, with tangible transformation in quality and business standards.
However, due to lack of regulations and effective policies, the
sector is experiencing many
challenges on its growth path. The budget must consider the fact that the Indian real
estate sector generates countless jobs across its various verticals. By granting it
industry status, the Government would enable the sector to access
debt lending at better interest rates and reduced collateral values.
• Take Steps To Provide
Better Clarity In Land Titles:
This is another policy
hurdle which needs to be tackled by the Government. Across the country, land
needs the benefit of legally documented ownership assigned to the
right persons
or entities. The budget should make specific allocations towards regularizing and
digitalizing land records.
• Provide More Adequate
Sources Of Finance:
Since the sector is not under the umbrella of any specific regulatory authority, financing has been
an issue over a number of years of credit slowdown. What is required at the current
time is the liberalization of finance
for the real estate sector. The budget should enable a
broader scope for external commercial borrowings for real estate and provide a
general relaxation of financing
norms.
• Take Steps To Moderate
Rising Input Costs:
The input prices for construction have skyrocketed in recent years, rising
by more than 50% in the
last two years alone. The budget should make provisions for
subsidized construction materials for low-to-mid-income housing, and
rationalized license fees
and other government levies.
• Unblock The Approvals
Pipeline: In this budget, the Government
should come up with simple and effective polices that will ease
real estate development approval procedures.
Single-window clearances are the need of the hour, since the
absence of such mechanisms causes project delays.
• Take Steps To Improve
Investor Interest:
REITs should be implemented
so that small investors will get a chance
to invest in real estate assets. The enactment of legislation on REITs to
provide exit opportunities to real estate investors would be a real step in the
right direction.
• Enact the Real Estate Regulatory Bill:
The Government should once and for all finalize and implement the proposed Real Estate Regulatory
bill, which is needed to bring rationality back to the sector. This
draft bill, which is pending since 2009, aims to create a regulatory authority for the realty sector, ensure sale
of immovable properties in an efficient and transparent manner, and to
protect consumer interest. One key
proposal of this bill is to set up a regulatory authority in each state. The
sector
looks forward to intentions in this regard finally translating into action.
The Real Estate
Stake-Holders look forward for early
announcement by FM,the
measures stated above
About the author..
Dr.K.R.THOOYAVAN is Editor In Chief at Our Building and Construction Magazine.
Dr. KR. Thooyavan, B.E., M.T.P, F.I.E., FITR, F.I.V.,
PG.DIP.US (ITC-Holland) Ph.D
Chief Planner & Member (Retd),
CMDA Former Dean Hindustan College of Engg.
Professor (Design Chair), Measi Academy of Architecture,
87, Peters Road, Chennai - 600 014
For Comments
Email : krt1945@gmail.com
The
article from Our Building and Construction, May 2013
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