Realty sector seeks reforms for a breath of life

Realty sector seeks reforms for a breath of life

The Economic Survey 2010-11, which was tabled in Parliament, called for reforms in the realty sector, terming it as a key sector for India's growth.

The real estate sector is facing a host of issues. These include rising interest rates, high stamp duty and drop in foreign direct investment (FDI). Clearly, reforms are the need of the hour for the sector.

The Economic Survey 2010-11 , which was tabled in Parliament on Friday, also called for reforms in the realty sector, terming it as a key sector for India's growth.

"In this emerging services sector, while short-term worries such as hardening interest rates need to be addressed, there is also need for some fundamental reforms like tackling the high stamp duty which makes even honest citizens deal in black money," the survey said.

The report also pointed out problems related to foreclosure of loans and the Urban Land Ceiling Regulations Act (ULCRA), which need to be resolved at the earliest.

The annual report called for solutions to problems such as increasing interest rates, which is turning out to be a big deterrent for potential property buyers seeking home loans.

The economic forecast, which came ahead of the Union Budget to be tabled on Monday, was concerned about a drop in FDI in the realty sector.

FDI inflows into housing and real estate has dropped from Rs 2,844 crore in 2009-10 to Rs 1,024 crore in 2010-11.

A joint study by advisory firm PricewaterhouseCoopers (PwC) and Urban Land Institute of India has said that India is one of the emerging real estate markets in the Asia Pacific region. However, it found the lack of transparency to be a nagging issue.

The study termed India as a semi-transparent market and ranked the sub-continent 41 on a global transparency scoring scale.

While the study placed Mumbai, New Delhi and Bangalore among the top 10 prospective cities for real estate investment in the year 2011, Mumbai and New Delhi also captured the top two places in terms of city development prospects during the year 2011.

The contribution to gross domestic product (GDP) from the real estate sector, including ownership of dwellings along with business services, witnessed a growth of 7.5 per cent in 2009-10.

"The sector has started recovering following the increasing activity in the Indian economy, however, with a fundamental difference. Customers are now going for need-based purchases rather than as investments based on the euphoria and hype witnessed in 2007 and 2008," the Economic Survey pointed out.

Courtesy: Mail Today