CREDAI submits a 10-point agenda to the PM for reviving real estate sector
The Confederation of Real Estate Developers' Associations of India (CREDAI) has written an open letter to Prime Minister, Manmohan Singh setting a 10-point agenda of action. This, they feel, will take the nation on an accelerated growth path even as it helps in solving the housing problem faced by millions of people across the country.
Pointing out that the economic liberalisation initiated by Prime Minister as the Finance Minister in 1991 had not covered the real estate sector, CREDAI called for comprehensive reforms for the sector encompassing land, administration, banking and tax.
It suggested creation of a single window clearance system and pointed out that a recent McKinsey report had found that delays in approval processes alone increase sale value of houses by 40 per cent. Delays due to multi clearances and approvals numbering over 40 by various agencies or departments of the Government - the average time being 18 months – are the order of the day though most of the Departments have the same series of check lists. This leads to duplication of submission by architects.
CREDAI has submitted a single window Act for consideration to Ministry of Housing and Ministry of Urban Development. Pointing out the bottlenecks in the system, CREDAI president, Lalit Jain said developers are forced to deal with 140 officials at various stages to obtain 40 plus clearances which ultimately leads to massive corruption. “Files are not cleared unless one greases the palms,” he lamented.
Referring to land reforms, CREDAI said restrictive land use has led to raising the cost of the tenements, killing agriculture land, reducing green cover and made physical infrastructure costlier. It said interest rates on home loans, especially in the affordable category, should not be more than 7 per cent. Currently, any purchase of housing unit costs 36 per cent in direct and indirect taxes which include VAT, service tax, excise duty and municipal taxes. At this rate, one has to earn 150 per cent of one’s current income to be able to afford a house and end up paying a huge income tax of 32 per cent.
It stressed on the need to devise a special tax-free affordable housing project scheme. CREDAI said India’s urban population has grown from 290 million in 2001 to 377 million in 2011 which accounts for over 30 per cent of the country’s population. The number of cities and towns has also increased from 5,161 in 2001 to 7,935 in 2011, a 51 per cent growth. The number of one million plus cities has grown from 35 in 2001 to 53 in 2011, registering a 45 per cent growth. By 2031, India will have more than 87 metropolitan areas and the country’s urban population is likely to soar to over 600 million, adding about 225 million people to present urban population.