Real Es­tate

India Today - - COVER STORY | JOBS -

SIZE $105 bil­lion (2015) CON­TRI­BU­TION TO GDP 9% TO­TAL JOBS 1.5 mil­lion

CHAL­LENGES

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

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