In­dia crack­down on ‘name­less’ prop­er­ties could purge sec­tor

Ex­perts see im­ple­men­ta­tion hur­dles

Kuwait Times - - BUSINESS -

In­dian Prime Min­is­ter Naren­dra Modi’s vow to take on be­nami, or name­less prop­er­ties, can bring greater trans­parency to a no­to­ri­ously opaque sec­tor and help check prices if a new law is im­ple­mented prop­erly, ex­perts said yes­ter­day.

The prac­tice of buy­ing a prop­erty in the name of some­one other than the buyer has been widely mis­used to buy real es­tate with un­de­clared in­come and with fake names and iden­ti­ties to avoid pay­ing tax. It is es­ti­mated be­nami prop­er­ties worth bil­lions of dol­lars are held un­der fic­ti­tious names across In­dia, by­pass­ing laws to check own­er­ship and de­priv­ing states of valu­able rev­enue that could be spent on de­vel­op­ment and wel­fare schemes. A 1988 law on such prop­er­ties was amended this year to ban il­le­gal be­nami trans­ac­tions with stricter pun­ish­ments in­clud­ing im­pris­on­ment and a fine of up to a fourth of the prop­erty’s fair mar­ket value. These prop­er­ties can also be con­fis­cated. “We are go­ing to take ac­tion against the prop­er­ties which are pur­chased in the name of others. It is the prop­erty of the coun­try,” Modi said in his monthly ra­dio ad­dress on Sun­day. “This law will be put to use in the com­ing days to fight cor­rup­tion,” he said. Prop­erty as de­fined un­der the 1988 law in­cludes not only land and homes, but also as­sets such as gold, stocks and bank de­posits. “If the new law is im­ple­mented prop­erly, there will be greater trans­parency in the real es­tate sec­tor, there will be less cor­rup­tion, and we may see a correction in prices,” said Vinod Sam­pat, a prop­erty lawyer in Mumbai.

“But these trans­ac­tions are hard to track, and the gov­ern­ment has a poor record of im­ple­men­ta­tion. While the in­ten­tion is good, it re­mains to be seen if the law can be im­ple­mented prop­erly,” he said. A se­ries of slum evic­tions in cities in­clud­ing Delhi has put the spot­light on an acute hous­ing short­age in ur­ban In­dia. About a third of the coun­try’s 1.25 bil­lion pop­u­la­tion lives in cities, with num­bers ris­ing as tens of thou­sands of peo­ple leave vil­lages to seek bet­ter prospects.

A gov­ern­ment plan to pro­vide hous­ing for all by 2022 is meant to cre­ate 20 mil­lion new ur­ban hous­ing units and 30 mil­lion ru­ral homes. But the gov­ern­ment has been crit­i­cized for the slow pace of im­ple­men­ta­tion. Go­ing af­ter be­nami prop­er­ties can help ac­cel­er­ate the pace of im­ple­ment­ing the gov­ern­ment’s plan, said Anuj Puri, chair­man of real es­tate firm Jones Lang LaSalle In­dia. “When ti­tles are clear and trans­ac­tions trans­par­ent, the con­fi­dence of lenders in­creases, so we will see a pickup in lend­ing to buy­ers,” he said. “This will in­crease the sup­ply of res­i­den­tial real es­tate.” The fo­cus on be­nami prop­er­ties comes on the heels of a crack­down on un­de­clared “black money” by with­draw­ing high­value ru­pee bills from cir­cu­la­tion. — Reuters

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