All India Association of Industries(AIAI) is a premier Chamber of Commerce , an apex body representing the trade, industry and employment since 1956 . AIAI is a think tank established to suggest government about remedial measures in the changing economic scenario.
Mr.Vijay Kalantri, President, All India Association of Industries says, The cities are crying for shelter and the irony is that shelter is standing in the clouds but the families are not able to have one above their head!
This is the situation of real estate in India . Real estate got promoted as an investment more than as a shelter provider .
The rising bias towards home loans due to the attached subsidy provided home buyers an opportunity for investment which led to a fast track rise in home prices so much so that that the same made impossible for the first time home buyer aspirants .
At a time, when the household real income of such first time aspirants fell on the lower side, real estate prices have vouched to remain sticky on the upper tick rather than the real estate prices imbibing the corresponding elasticity to household income.
There have been more second home buyers rather than first home buyers leaving absolutely no space for the first home buyers due to their contracting incomes in contrast to rising standard of lifestyle making them more dependent on rented homes than buying their own.
The other killers in the destiny of real estate is the hiked reckoner rate, stamp duty and registration rate , TDS, no conversion/rotation of real estate income into any other instruments of investment such as stock market or gold, funding education etc except ill return yielding government securities leaving no margin for the use of investment for any other prospective use other than refueling another creation of real estate.
This has led to a contagion effect leaving the real estate sector into a narrow minded growth.
Post COVID19 what will lead the real estate sector into further detriment is the Lockdown which will lead to loss of daily wage labor due to reverse migration of this labor to its native home due to fear of infection, death and if not COVID19 than possible death due to hunger.
The introduction of RERA Act was scheduled to curb the mafia controlling property rates and black money in the real estate sector. Though RERA did its bit in controlling the black money in transactions, Why it failed on larger scale is a question to be reckoned?
RERA has failed to be implemented 100% in letter and spirit .The bureaucracy at various levels of permission , permits and licenses have made it fail . The main reason now being in the open that black money sustained bureaucracy and not the human capital based service industry mainly of MSME in nature .
Black money actually pumped the pockets of bureaucracy rather than the pockets of the business or the employment in this sector or the aspiring families who wished to buy the first home for themselves.
At a stage of complete distraught in loss of labor and business income the real estate industry is in doldrums . Thus,
Create an Real Estate Stock Exchange to trade in real estate bonds for projects to be developed . This will aide developers seek funding for their projects in a transparent manner instead of the developer having to knock and tap corners and subject such investments for repeated stamp duty and registrations .
The only way to revive the real estate industry is by pumping liquidity in the real estate by introducing real estate bonds.
There needs to be a reviewable guideline for reckoner rate elastic to requirements of the economy.
Setup one time uncognizable window in encrypted form for processing permissions for real estate developers with blind wall between both the parties. This will reduce under table transactions and increase price competiveness in the real sector meeting the price expectations of the first time home buyer.
The Government is proposing to provide affordable housing to the middle income population. In such a proposition the government could possibly buy out the unsold apartments for a long time due to the issues of unaffordability and resale them to the home buyer aspirants.
Government should speed up the process for golden passports to support construction industry and sale of properties.
Reality sector should be brought under ambit of GST to avoid multiple taxes and make it consumer friendly.
Funds will now be used to provide priority debt financing for the completion of incomplete or stalled housing projects in the affordable and middle-income housing sector
The realty sector comprising of the real estate and construction, employs over 52 million workforce with over 80 per cent of the employment being minimally skilled workforce who are the daily wage workers. Thus, the employment is not of perennial nature up to retirement and the workers are interested only in cash to fund their farms in the native lands. Thus this workforce is not covered by any social security cover hence registration on a National level Board will ensure benefits similar to one as far as post retirement pension or medical insurance is concerned.
The realty sector is an important one in India Growth Story as it has to provide affordable housing to India’s 1.3 billion citizens. Thus gearing up the construction and real estate sector is imminent for India’s for massive growth. Black money needs to be completely wiped out of transactions to make the housing affordable .
There was a recent government announcement of Rs 25,000 crore special window to provide funding to stalled housing projects to revive the sector and also to help in terms of incremental jobs, that is, employment generation, revival of demand for logistics, cement, iron and steel industries and many other adjacent industries. We hope the same is implemented on fast track.
We hope our suggestions are taken in good spirit of development of the economy in order to boost its growth, added Mr.Kalantri