If the delebrations at the recent two-day conference of CREDAI (Confederation of Real Estate Developers’ Associations of India), an apex body of developers, is any indication, the real estate sector that was shunned by the UPA government, is warming up to a resurgent BJP and its Prime Ministerial candidate Narendra Modi, and looking to the saffron party as its saviour.
The two-day CREDAI Conclave held in New Delhi on December 13-14, not just forcefully highlighted the problems faced by the real estate sector but also decried the UPA government for neglecting the sector. This time, the mood at the CREDAI conference on the theme of ‘Housing, the game changer leading to double-digit growth’, was in total contrast to such meets in the past. Instead of pleading before the invited Chief Guest – Housing Minister Dr. Girija Vyas, the key functionaries of CREDAI struck a strident note in denouncing the government’s housing policies and demanding rightful due for the real estate sector.
In the backdrop of the industry and corporate sector throwing their weight behind BJP and its Prime Ministerial candidate Narendra Modi, CREDAI also saw a saviour in the main opposition party as a number of BJP leaders including party president Rajnath Singh, Venkaiah Naidu, Shahnwaz Hussain and Anurag Thakur showed up at the meet in support of CREDAI’s cause.
In fact Naidu took no time to announce that he had come to extend moral support to CREDAI. Lending support to CREDAI’s cause, Naidu said that housing should be given industry status, stamp duty needs to be rationalised and home loan rates needed to be lowered. He was also in support of taking corrective measures with regard to the financing to the real estate sector which he said was highly skewed.
CREDAI President, C. Shekhar Reddy, strongly raised the issue of commercial real estate funding. He expressed serious concern that the banks’ exposure to the real estate sector was merely 3 percent (INR 1,26,000 Crore – equal to the exposure to one large corporate house) compared to 22 percent in China and over 30 percent in the US. He advocated liberal funding of the sector to create excess stock supply which will in turn bring down prices. Besides fund crunch, high taxation – to the tune of 30-40 percent being the bane of real estate, Reddy made a strong case for rationalising taxes like capping registration charges at 3 percent.
Endorsing Reddy, CREDAI Chairman Lalit Kumar Jain lamented that real estate sector which makes contribution of INR 4,00,000 Crore to the economy (6 percent of GDP) is not just being neglected but also burdened with heavy taxes – with stamp duty outgo alone amounting to INR 32,000 Crore. While stressing the need to promote affordable housing, Jain called for administrative and land reforms besides rental housing reforms which he said could bring down prices by 25 percent.
Sharing Jain’s concern, Venkaiah Naidu charged that the government has given a go-by to the 11th Five Year Plan document which talked about focusing on cities (urbanisation) through deregulation and development of land to achieve 9-10 percent GDP growth. He was also critical of the fact that there was no movement on important task committees reports relating to affordable housing, simplification of approval processes and rental housing.
The spotlight also turned on Real Estate Regulatory Authority (RERA). Jain averred that instead of being a facilitator, RERA will bring back inspector raj especially as banking, planning, approval and environmental authorities were not under the purview of the bill on RERA. Reddy said that RERA can be used as a tool to achieve double – digit growth, provided FSI, online sanctioning, taxation, funding etc., is brought under its purview. Housing Minister Dr. Girija Vyas assured real estate developers that RERA bill will be suitably modified if necessary, besides promising to consider CREDAI’s demand for easing CRE funding, relaxing FSI norms and doing away with multiple taxation.
But there was so much anger and frustration among CREDAI top brass that the Housing Minister’s assurance hardly cut any ice with them as on the second day of the conference in the presence of BJP President Rajnath Singh, Jain again lambasted the housing policies of the UPA government. He lamented that the UPA government was treating them as beggars despite the fact that the real estate sector was filling the coffers of the government by way of adding INR 12,00,000 Crore to the economy. The new President-Elect of CREDAI, Geetambar Anand, passionately sought Rajnath Singh’s support as he criticised UPA government for not paying any heed to their appeals for drafting suitable policies which can contribute effectively to employment and GDP growth.
Rajnath Singh told the audience how during the tenure of the Vajpayee government (1998-2004), great emphasis was put on real estate and infrastructure sector, and policy measures like low home loan rates, income tax relief on home loan and National Highway Development Project contributed significantly to the economy with record employment generation of 6.70 crore against the mere 27 lakh under the UPA regime (2004-10), as per NSSO data, and how India became a Current Account Surplus country.
Rajnath Singh was given a standing ovation when he declared that CREDAI’s demands could well make it to the BJP’s Vision Document being prepared under the chairmanship of former BJP president, Nitin Gadkari, for inclusion in the party’s manifesto for 2014 elections.
Notwithstanding the saffronisation of the conclave and CREDAI pinning its hopes on BJP and its PM candidate Narendra Modi, a section within CREDAI is in favour of consistently engaging UPA government and putting pressure on it in a run up to the Loksabha elections to meet its demands. It remains to be seen if the real estate will be MODIfied in the coming months.