SIZE $105 billion (2015) CONTRIBUTION TO GDP 9% TOTAL JOBS 1.5 million
Back to back disruptions—GST, the Real Estate (Regulation & Development) Act and the new bankruptcy norms—have shaken things up a great deal. Individually, these policies bring a broad range of benefits, but [the government] can’t create disruption after disruption and expect businesses to still put in a great performance.
In real estate, there has been a 75 per cent drop in demand for homes in certain pockets, such as Gurugram. There are hardly any new projects coming up in some areas. Considering that real estate employs 1.5 million workers, this is a grave situation.
In certain areas, as much as 30 per cent of real estate businesses used to run on cash. Here, the impact of demonetisation was especially severe. The secondary market has been eliminated.
In some cases, the issue is unavailability of labour. Many are getting into social schemes such as MGNREGA, which leads to a dearth of labour.
WHAT NEEDS TO BE DONE
India has to follow China’s lead in development of infrastructure—railway stations, metros, ports and national highways. In China, growth worth 2.5 per cent of GDP came from housing, 2 per cent from manufacturing and another 2 per cent from infrastructure. A focus on construction will also boost the steel and cement sectors.
Clarity is needed regarding companies that are going through insolvency.
The tax rate on affordable houses is 32 per cent, which is a disincentive for buyers. This needs to change.
A big issue is that bank credit has fallen by 50 per cent. Credit is available, but is not being availed of. Companies’ boards are not giving approvals for new projects.
Niranjan Hiranandani MD, Hiranandani Group