Reforms in real estate sector hold the key to the Government achieving GDP growth targets, according to Pradeep Jain, Chairman, Confederation of Real Estate Developers Associations of India.
Tax reforms and measures to access low cost funds through external commercial borrowings are needed, he said.
He told mediapersons that the sector impacts more than 250 manufacturing and services industries including steel and cement.
A fillip to real estate development holds immense potential for boosting economic activity and job generation. Supporting the real estate sector is important for the Government to achieve growth targets of 7-8 per cent.
Also, residential development needs to be supported to address the housing needs of the public, he said.
In the coming Budget, Credai, the apex representative body of builders, hopes to be granted industry status, measures to bring down home loan rates and bank support for project development. Tax concessions for affordable housing and income tax relief will help, he said.
Prevailing policies are unfavourable to builders sourcing bank funds. They are now dependent on presales and internal generation. This does not help increase housing supply. Providing industry status to housing will help the builders access bank funds, he said.
External commercial borrowings have to be through the automatic route and not approval route, which is time consuming, he said.
Reforms in real estate sector relate to bringing down tax load on projects – often up to 50 per cent of the sale price is towards tax revenue, he said.
The delay in project sanctions is worsening – it takes 2-3 years for a project to be cleared in Delhi city, he said. In general the delays have gone up to 36-40 months from 18-24 months.
There are pockets like Punjab where projects are cleared in 48 hours and 15 days is the deadline after which projects are deemed to be cleared. Bihar and Gujarat are aggressive in speeding up clearances. Such initiatives are needed in more States, he said.
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