Politicians need to learn urban science for effective policy making in Realty Sector
Lalit Kumar Jain, Chairman Credai India & CMD KUL
Interviewer : Sandeep Pattnaik
Lalit Kumar Jain, Chairman Credai India & CMD KUL

Political tools to exploit name “builder” for vote doesn’t allow reforms, which seemingly benefit developers though the fact is otherwise, says Lalit Kumar Jain, Chairman Credai India and CMD of Kumar Urban Development Pvt. Ltd [KUL]. Shri Jain popularly known as the “Green Man of Pune”. In his exclusive interview to Sandeep Pattnaik of Gharabari.com, he shared his views about the fiscal and administrative reforms needed to accelerate growth (GDP) through housing sector. Excerpts.


  1. The biggest concern among realtors today is how to clear the unsold inventories be it in residential or commercial. Some experts are of the view that, it is due to exorbitant prices charged by developers, due to fallout of a realty bubble, while a few others are of contrarian view. What is your take on that? 


  1. The real estate sector is of strategic economic importance to India, as it is the second largest employment generator after agriculture and contributes about six per cent to India’s GDP. Housing in India varies significantly and can reflect the socio-economic mix of its vast population. In the last decade, there has been tremendous growth in the country’s housing sector, along with demographic changes, rise in income, growth in the number of nuclear families, and urbanization. The market is in a slow down mode since last 5 years. 2014 was the worst of all 5 years. Sales have plummeted and so have the new launches. This reflects into speculative price rise when sales go up but supply won’t (it would take some time to launch projects to meet rising demand). The rate of interest going up to 10.5 (now 10.25) from 7.5 was a major spoiler besides the global slowdown and GDP growth below 5% in India.


  1. Valuation of properties in India is plausibly on the upper side compared to other Asian countries that lures the investors to park their money outside the Country. What is your view?


  1. This is mainly due to the under utilisation of land in India. Records show that 35% of population stays on just 2.5% of land in India. Availability of developable land is limited also due to lack of infrastructure. Besides, archaic land laws and FSI (land-to-construction ratio) restrictions are adding to the cost. Urban planners in general lack knowledge of the rapidly growing process of urbanization and its pressure on infrastructure.

    Politicians require to learn urban science for effective policy making. Currently they earn votes by blaming builders, while on the other they do  not allow realty reforms which can benefit all stake holders.

    I am of the firm opinion that reforms which will bring in investment and reduce costs in real estate and infrastructure sectors to throw the market open to the world to create world class smart cities that the government aims for.


  1. Credai has called for Land, Banking, Tax and other Administrative reforms at various forums to boost realty sector. Which are the key inputs of the apex body to the Govt under each of these categories? Please share.


       A. We expect the following to happen immediately and in a short period of time.


I. Efficient and accountable governance in Building Approval Process by an appropriate initiative Centre, with all state government officials following a proper and a firm route.


           II. Following reforms need to be accepted with government’s    priority to –


      a.       Administrative Reforms:

  • Single Window (including central, state government clearances through standardisation of check list) and online clearances removing human interference to expedite approvals and eliminate corruption.
  • Make the entire system accountable by fixing responsibilities.
  • Amend municipal administration and political control system within law.
  • Municipal administrative cadre for better human resource                    


      b.      Banking reforms:

  • Currently the housing sector is marred by misconceptions and with rigid RBI regimes it has delayed projects further adding to rising costs while consumers continue to suffer from increasing prices.
  • Housing to be given a status of Infrastructure and funding to be made easier with easy role over.
  • Home loan rates to be bought below 7.5%, lending rates below 10%
  • Funding to developers to include land cost as well as role over facilities like industry. (the market is cyclical and hence the banks should adjust as per market conditions)


      c.       Tax Reforms:

  • Currently housing pays about 36-37% of sale prices in Taxation to Centre, State and local Municipal Bodies in direct & indirect taxes.
  • A rationalized administration will make housing affordable.
  • Fiscal Reforms with FDI, ECB, REIT and mutual funds need to be focused & rationalized.


      d.      Land Reforms:

  • FAR/ FSI to be more than 5 in developed urban areas for affordable infrastructure, lower land component costs, viable public transportation and save Greenland destruction.A complete relook of FAR system in country on the lines of Hyderabad. If needed land titles to be managed through online registration process which would enhance faster investment in the sector. 
  • It would also be important to relook land inquisitions & Real Estate Regulation bill to achieve the underlined objective of CREDAI.
  • Land title and title insurance
  • Digitization of land records and system of mutations to be revamped.
  • One language and national land record bank for ease of land transactions.CREDAI as a real estate body shall make an attempt to present to Honorable Prime Minister and the concerned ministers to accelerate growth (GDP) through housing sector.


  1. With measures like FDI in real estate, REITs, India is likely to draw investment from outside. Which of the Countries do you think will be the major participants in the India realty growth story?


  1. According to me, USA, UK, Singapore and Hong Kong will be major stake holders. However additionally, investments may flow from Middle East, Gulf countries.


  1. Do the current fall of crude oil globally in anyway help reduction of key input prices in the realty sector and boost margin for developers?


  1. In spite of fall and slow down we saw a huge rise in cement and steel prices. Though diesel rates have come down still the steel and cement remain high. Domestic construction industry has been jostling with steep and steady rise in prices of cement, crude oil, bricks and other input material, which have risen by over 30% since last 3 years.


  1. Coming to your city of Pune, which is likely to be included in the list of ‘Smart Cities’; what infrastructural developments has been proposed by the State Government? What is the apex body’s [Credai] demand in this respect?


  1. No city can be smart city without stake holders coming forward with determined efforts. Lack of resources and apathy of policy makers keep such project on paper. I hope things change in the country with strong leadership of Sri Modi.


  1. You are known as “Green Man of Pune”. Please share with us some of your green initiatives in the mega city...     


  1. It started with our initiative to plant and donate thousands of trees to planning authority every year consistently for over ten years.Now we wish to make all our project complying green building norms. The entire material selection to construction practices have been developed around concept. Looking at the current scenario I believe that smart, sustainable green buildings have become a necessity in today life to protect our environment. Though green homes are little expensive but they end up saving money in the long run. Green buildings are usually constructed to build healthier and safe environment.  There is a cost impact of developing green projects. Few cities have been supporting the green initiatives through incentives to build the same. There needs to be a national policy to encourage such developments daily supported by states. We too at KUL are encouraging more eco- friendly projects like KUL Ecoloch, KUL Sublime, and KUL Nation. The major demand for green buildings in India is coming from the private sector. According to the recent study, India has emerged as leading destination for green building. The country has implemented a number of home-rating schemes and building codes, which has opened up a wide range of opportunities in construction, architecture and engineering design, building materials and equipment manufacture. India’s green building footprint has grown considerably over the past few years. The marriage of green building design and technology like various BMS systems plus city/ township integration is the way forward.

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