Real estate is the second largest job creator in the Indian economy; it supports 250-plus allied industries as also plays a major role in GDP growth. It has seen a paradigm shift because of the tsunamis of reforms - economic, taxation and regulatory. These led to challenged times over the past few years. Then, end-2019, Corona happened.
In sync with the global scenario, the Indian economy struggled to restart after the lockdown of 2020. Stakeholders in Real Estate did their best to get back to near normalcy, some positive results were seen during Sep 2020 – Jan 2021. Feb 2021 saw India face the challenge of the ‘second wave’; the lockdowns are back – as are the challenged times.
It is the vaccination process which will ultimately take the world to ‘near-normalcy’; but with such a huge population, it is going to be a long process. Herd immunity is going to take a tad longer than had been estimated, and real estate needs support from authorities to help sail through these unprecedented times. As 2020 showed, support by the Government and timely corrective actions in such challenged times ensured survival and to some extent, growth in Real Estate.
As an industry body, NAREDCO will place before authorities some hard facts and suggestions to overcome the challenged times. A webinar series on ‘Ease of Doing Construction in the wake of Covid-19: Realty Check’, will be a platform to deliberate on multiple aspects of Construction and Real Estate. It will focus on practical solutions to ease the pain, and how speed up the processes, to ensure survival and growth in wake of pandemic - and beyond.
The pain points and their solutions include aspects such as regulatory, credit and finance, insolvency and bankruptcy laws, among others. Some challenges have been around since some years now, the pandemic has heightened the need to solve these ASAP. Aspects like quicker approvals, support from allied sectors and policy recommendations are on the agenda of the webinar series.
Difficult times call for some unique changes in how the industry survives and grows; the biggest challenge for residential real estate is the need for urgent policy support to boost rental housing. The idea that a home has to be owned needs to co-exist with a healthy rental housing segment, which will provide a practical solution to housing shortage across urban India. Rental Housing has been spoken about a lot, now it needs a push in terms of a national policy, with time-bound implementation.
Beyond rental housing, from an industry perspective, the challenges include labour and the supply chain; and the sharp rise in costs of both. Quick moves to ensure no scarcity of both are an immediate requirement, pan-India.
Real Estate has procedures and SOPs in place, the authorities need to empower movement of labour and material so that work continues at sites. Cartelization of construction material needs to be dealt with urgently, while measures by authorities to support migrant labour welfare need to be ramped up.
The regulatory and legal aspects required are largely an encore to what was done in 2020; extension of time lines for IBC and RERA are a must – and not 3 months at a time with extensions being announced; this time the industry needs a proper time line for such provisions to have a positive impact.
Ensuring the economy does not witness a large number of NPAs in such challenged times needs moratoriums to not just be announced, but also implemented. And, in a time-bound manner. Banks and financial institutions need to be pro-active in implementing relief measures in sync with announcements made by authorities.
Reduction of circle rates as also partial or full waiver of stamp duty will boost sales; and authorities would see the spurt in revenue which Maharashtra witnessed as a result.
Similarly, the home buyer needs enhanced support in form of not just low interest rates in home loans, but also enhanced taxation benefits on buying a home as also on EMI payments.
Subvention schemes need to make a comeback; authorities would do well to bring this back – and soon.
The process of permissions and clearances needs to be speeded up. Policy tweaks are urgently needed to provide for time-bound, single window clearances.
Commercial real estate has huge potential to steer growth of the Indian economy, it needs support from authorities on par with residential real estate to enable it play its role in boosting the GDP.
On GST, NAREDCO has put forward the need to remove GST on Redevelopment & TDR, as also to rationalize GST on essential raw materials like steel and cement. Reintroduction of Input Tax Credit in Real Estate will ease the situation to some extent.
Across States and Union Territories, a varying number of construction related charges and levies result in differentials across geographies, as also increase in project costs. These need to be rationalized and in some instances, urgently reviewed.
And finally, ‘Ease of Doing Business’ needs a huge boost: the industry faces ‘hiccups’ including NOCs from aviation, defence and environment authorities. The process for these need to be speeded up, norms and regulations made practical, and clearances time-bound.
NAREDCO, as an industry body, hopes the webinar series will help bring out solutions which authorities can speedily implement. We need to not just survive the pandemic, but also ensure GDP growth, job creation and bringing the economy ‘back on track’. As we work towards ‘near normalcy’ in a world where Corona and humankind will have to co-exist with for some more time than we had estimated, quick action by authorities will ensure better times ahead.