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Policy advocacy contradictory in Indian real estate

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Bottom Line: Track2Realty observes that unlike many other matured & emerging sectors, Indian real estate has completely failed on policy advocacy. The local nature of the business, added to the fact that vested interests dominated the industry bodies, defeated the very purpose of the policy advocacy. The casualty has a direct impact on the professional practices in the sector. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, land acquisition bill, parliament of india, Government of IndiaDuring the CREDAI national convention few years back, a miffed real estate seemed to settle scores with the then Union Urban Development Minister Kamal Nath. Displaying stiff opposition to the proposed real estate regulator, the builders’ body went critique to say it is not actually a regulator bill, but builders’ harassment and public amusement bill.

The minister sitting on the dais kept smiling over the CREDAI allegation that after the implementation of the bill, the face of the sector is known only either to the God or to the minister. Kamal Nath, however, took no time to hit back on the same platform when he said that the realtors have got into the habit of living in an era of boom and anything less than boom is cried hoarse as doom and gloom.

Much water has flown since then but it seems when it comes to policy advocacy real estate and the policy makers are still at loggerheads. Realty body proposes and the government disposes on occasions more than once and policy advocacy is something which, if happens at all, is always on a one-on-one basis depending on the developers’ individual clout and personal rapport with the minister or official concerned. Sadly, most of such policy advocacy is actually back channel lobbying for the company concerned, with hardly any short term or long term impact over the fortunes of the sector.

Challenges of policy advocacy

Policy advocacy challenging due to localized nature of business

Lack of consensus among the developer biggest roadblock

Larger developers get what they want through back channel negotiations

Blame game of developers, instead of engaging with policy makers, also responsible for policy advocacy failures

In an eco system where most of the contentious issues have not been settled over the years, one naturally wonders whether there is any communication by the stakeholders concerned beyond the media eyeballs. Yes! There are two notable builders’ bodies called Confederation of Real Estate Developers’ Association of India (CREDAI) and National Real Estate Development Council (NAREDCO) that lobbies with the government for their interests but there seem to be a clear realization by the government side as well that these industry bodies are lobbying for their vested interests than policy advocacy in the right context.

The problem is that asking for industry status, the sector does not want elements of accountability that comes with the package. Quite opposed to the very idea of regulation, even after self-regulatory attempts didn’t work out, realty does not evoke confidence at the policy level and often ends up being at loggerheads with the government. Though policy advocacy is very much desirable in the sector, it is yet so debatable that the stakeholders have failed to evolve a consensus over its issues and agenda.

There are many within the sector who are forthright in accepting that unlike policy advocacy adopted collectively in other industries to create a level playing field, in real estate the business methodology does not support any such move since the larger players in the fray are too big for the boots of industry bodies concerned.

For example, when the CREDAI wanted to throw its weight to sign the code of conduct a few years back, it ended up with leading players’ indifference and eventually expulsion of three giants, DLF, Hirco and Hiranadani from its Karnataka chapter. No one is sure till date how many of its 11,500 odd members spread across 105 cities in 22 states have actually signed it. More importantly, whether they follow any uniform code of conduct in dealing with the homebuyers even after signing the CREDAI document?

The micro market focussed business with myopic vision makes the policy advocacy a distant dream for the Indian real estate. Even prior to the Union Budget when the business bodies of other industries lobby it hard to get the best deal for them, realty ends up with endless debate only to be left sulking in the end. In the past, industry bodies have made some blatant demands of the government to bring about certain reforms in the sector. However, most of these demands were put forth without having in place the adequate enablers of change, which could address the level of confidence needed in the sector by the government, financers and consumers alike.

Sachin Sandhir, Global Managing Director-Emerging Business of RICS believes it is absolutely imperative that stakeholders engaged across the sector take adequate steps in order to reduce its risk weightage in eyes of the lenders, improve credit worthiness to mitigate the lack of liquidity, and in the process instill consumer and investor confidence and arrive at a common consensus to drive the industry in a better and profitable manner – in the process being viewed favourably by policy makers.

“A common view from all quarters within the real estate and construction sector is acquiring the long demanded ‘industry status’ for the sector, along with an ease in accessing capital. While there has been consensus on these issues for long, the views and opinions in enabling these factors of change to find a place within the industry are varied across stakeholders. In my personal opinion, in order for the sector to acquire industry status and for capital to be more accessible, there is a prevalent need for the realty sector to undergo a much needed ‘image makeover’. It is imperative that the sector improves on its global transparency ratings and creates avenues for skilled manpower to be employed and retained in the sector. Should we choose to go down this route, we will attain a favourable response from policymakers, investors and stakeholders alike,” says Sandhir.

Arvind Nandan, an independent property consultant, is candid enough when he says any talk of policy advocacy is meaningless unless the government is a willing party to come on board for dialogue and discussion. Developers alone can not take policy advocacy forward because they have been a partner in crime with project delays and illegitimate source of funding in the sector.

“The idea behind policy advocacy must be to bring government and private players together for meaningful dialogue and discussion for the benefit of all stake holders, including the consumers. What is happening actually is that sector lacks vision on reforms and hence policy means different things to different stakeholders. There are developers, financers, facilitators, occupier. Even when you say land owners, it can be either a developer or agriculture land owner, and to bring everyone on board for consensus you need credible industry forums. I am not sure unlike other industries a standalone face can represent the sector, since there is no superstar or charismatic leader in the sector today,” says Nandan.

Nikhil Hawelia, Managing Director of Hawelia Group admits that the non-seriousness of the policy advocacy on part of real estate industry bodies is now seen as deliberate in collective consciousness. According to him, no one within the sector want a level playing field due to non-cohesive nature of the business and hence policy advocacy is more about media noise due to which it often fails to address the core issues.

“I do admit that the developers need to engage with the government to make the officials accountable. But the problem is that there is no consensus on what are the issues to deal with as every micro market has its own set of critical issues. Moreover, there is no transparency among ourselves as to which issues are equally desirable to create a level playing field in the business,” says Hawelia.

Some analysts are of the view that in some other sectors people are vocal because they come from very powerful political background and are second generation entrepreneurs. Then, they are active at the federal level without any structural defect where policy at centre might help at some level and hamper at some other state level. Automobile policies, for instance, are framed for across the country.

Realty is predominantly a regional business, primarily on account of land being a state subject. Therefore, it is a tough task for one single body or association to represent the views and opinions of all stakeholders in the sector. Some sector analysts assert that few realty associations and public interest bodies are all working at some level in the same direction to improve dealings within the sector, albeit the medium used to communicate these views vary.

This school of thought hence insists that at the end of the day it is not necessary to be one voice in the industry, as far as the message is the same and consistent across any one whom delivers it. The question remains—has the voice been one?

CREDAI patronises Mercy Kuttan Athletic Academy on Women’s Day

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CREDAI to support the academy by providing high quality training infrastructure.

CREDAI, India Realty News, India Property news, Real Estate India, Track2Media, Track2Realty, Track2Infra, India real estate, property marketProviding the much-needed push for Mercy Kuttan’s dream, Confederation of Real Estate Developers’ Associations of India (CREDAI) has adopted the Mercy Kuttan Athletic Academy to encourage sports and train talented young women athletes of International calibre.

This gesture would decrease the stress on the financial worries and thus channelize all the academy’s energy to create world-class athletes. The academy would be renamed as CREDAI Mercy Kuttan National Academy for Excellence in Sports.

The Mercy Kuttan Athletic Academy is a non-profit Charitable Trust founded in June, 2009 with 11 students. The Academy has produced several athletes who have attained State, National and International level achievements in a span of six years since its inception.

On the association, Irfan Razack, Chairman, CREDAI-National said “CREDAI is delighted to be instrumental in bringing about this fortunate turn of events for such a noble project which has a long standing return on investments in terms of grooming Athletes of International Standards, generating employment opportunities for these women Athletes and thus eradicating poverty and empowering women to explore their potentialities.”

Indian athletes, especially women athletes from Kerala, have an amazing track record in athletics. The achievements made by yesteryear athletes in Kerala, such as P. T. Usha, Mercykuttan, Shiny Wilson etc. and current stars like Preeja Sreedharan, Tintu Luka have enhanced the awareness and interest of athletes and their parents, to aspire for a career in athletics.

Some genetic factors combined with physical stamina due to growing up in hilly terrains and the passion of creating international athletes have all culminated in the formation.

Alongside its commitment for Housing for All, CREDAI is now also focusing on build the country’s sports talent. India is known to produce high quality underlying potential, which can only be tapped to the fullest by providing them with world-class training facilities and also by giving them the opportunity to train with best-in-class trainers.

This is also a step closer to empowering women of the country and encouraging them to achieve what they desire.

Hanging sword of approvals behind project delays

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Developers’ counter view on project delays

CREDAI, India Realty News, India Property news, Real Estate India, Track2Media, Track2Realty, Track2Infra, India real estate, property marketGaurav Kapoor booked a flat in one of the newly launched projects of Delhi-NCR in early 2007. He was promised the flat would be ready for possession within three years with a grace period of six months. To play safe Gaurav even opted for a construction linked payment plan to the developer but six years have gone and he is yet to get his flat and every time he has approached the developer, various reasons for delay have been cited from macro economic conditions to funding woes and approval delays on part of the government agencies.

When Track2Realty approached the developer, he had his own share of woes and list of approval processes being delayed which would have been a matter of few weeks in normal course of time.

The policy makers seem to be determined, at least on the face value, to reform the real estate sector and create a level playing field for the buyers. The intent no doubt is good with the Real Estate Regulator Bill but in this reforms process certain grey zones have not been addressed that could have a far reaching implication on the timely completion of the project.

Developers maintain obtaining approvals is quite a tedious and cumbersome process and they are required to obtain more than 50 approvals to build a project. The process usually starts with Ownership Certificate, which should ideally take 15 days to acquire. However, this ends up taking few months.

The EIA clearance, Aviation and Archaeological Clearance may take 1 to 3 years. Then comes approval for building layout, which again takes an inordinately long time. The process of getting building permit from the Building Proposal Office should ideally take 30 to 45 days, but it sometimes extends up to six to 12months.

Afterwards, it is Non Agriculture permission, followed by “N” number of NOCs from Tree Authority, Storm Water and Drain Department, Sewerage Department, Electric Department, Traffic and Coordination Department, NOC from Chief Fire Officer, etc. Another important step is obtaining Environment Clearances. Delay in obtaining Environment Clearance has become a major deterrent for developers.

Although the government has issued a circular to clear such projects in a time bound manner, it takes more than 17-18 months to obtain environmental approvals. Apart from this, a developer has to obtain approvals for Water Connection, Permanent Sewerage Connection, etc.

Lalit Kumar Jain, Chairman of Kumar Urban Development feels it is often not even discussed that the developers reel under the ‘NOC regime’ and not ‘Approvals’ that can be revoked at the will of authorities. Revocation of stopping development at the behest of some local bodies is a reality. But currently, developers are more concerned about the unduly long approval process as the entire real estate spectrum, from developers to end-consumers, is suffering major losses from it.

“Yes, we are at mercy of authorities as far as NOCs are concerned. These officials have the power to revoke NOCs at will. And, in a way, this is also breeding corruption in the system. We need to root out all the irregularities that plague the real estate sector from flourishing. Obtaining the innumerable clearances is an issue which has been festering since a long time. It is high time we take appropriate measures to speed up the process of obtaining approvals,” says Jain.

Mohit Goel, CEO of Omaxe blames delay in project execution is substantially and mostly on account of frequent external factors that has its repercussion on delays perceived to be due to internal factors. Internal factors per se may be sporadic and very few during a project cycle. For instance, delay in getting approval leads to unintentional straying from planned project development cycle. Interrupted external factors lead to discontinuity in planned production cycle, fund blockage and cost escalation.

“Before launching a project, builders are supposed to take various approvals. While on one hand, a major chunk of the developers’ money is blocked in the land cost incurred by him, any delay would result in cost escalation to the end-user. Further, various approvals have different validity. By the time one approval comes, the other NOC/approval expires; the renewal of which further adds to the delay for developers and buyers,” says Goel.

Diipesh Bhagtani, Executive Director, Jaycee Homes also asserts no developer likes to delay the project purposely. The cost of construction escalates in terms of inflation, increased labour cost, interest on loan, maintenance of the structure or land if the project is delayed. Biggest of all the brand equity and trust of the developer is affected. There is great amount of monetary and nonmonetary losses incurred by the developer if the project is delayed for whatever reason. Hence the delay in project is seldom due to internal dynamics.

“The entire process of getting permission is tedious and complicated. A developer has a separate team of people working on procuring permission from various departments. The toughest is the permission to start work. Single window clearance is a distant dream and running from pillar to post for approvals takes away most of the time of the developer,” says Bhagtani.

Developers have been pitching for a single window clearance from a long time. They maintain if the government really wishes to reduce cost of housing then the only solution is single window clearance for all real estate Projects. They believe single window clearance is the only solution to this mess of obtaining multiple of approvals that too from different government departments.

Online approvals and single window clearances are the need of the hour as this will significantly reduce time taken to complete projects. It will also reduce red-tapism, which has been a huge obstacle to clear approvals on time.

The developers believe this system will see a rise in consumer satisfaction and speedy approvals, resulting in sale price reduction of about 10-25 per cent as it has the potential to not only speed up the time taken to complete projects, but also reduce project costs, thereby bringing in some sanity in these times of uncertainties in the market.

CREDAI Chennai signs MoU to maintain 12 bus route roads

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CREDAI, India Realty News, India Property news, Real Estate India, Track2Media, Track2Realty, Track2Infra, India real estate, property marketTrack2Realty: The Confederation of Real Estate Developers’ Association of India (CREDAI) signed a memorandum of understanding (MOU) with the Chennai Corporation on Friday, April 26, agreeing to maintain 12 important roads in the city.

The agency has agreed to clean the 12 roads, fix sign boards, maintain medians and traffic islands and ensure that posters and banners do not come up.

The 12 roads are namely Purasawakkam High Road, Vepery High Road, Gangadeswarar Koil Street, Gandhi-Irvin Road, Raja Annamalai Road, Narayana Guru Road, Jothi Venkatachalam Road, E V K Sampath Road, Pantheon Road, Raja Muthiah Road, Police Commissioner Road and Whannels Road.

The organization will employ garbage cleaners, gardeners and other staff required for the above. They will also fix clock towers for 20 corporation gardeners.

Maha SEZ exit policy will be a flop, says CREDAI

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Track2Realty: Strongly opposing the country’s first ever SEZ exit policy formulated by the Maharashtra Government, CREDAI has expressed fear that the move will cause urban chaos rather than solving any.

CREDAI National President Lalit Kumar Jain wonders as to how the integrated industrial township policy will be successful where the SEZ concept to promote industries with a plethora of concessions has failed.

“It is for the centre and state together that facilitated SEZ to ponder over the failure of SEZ and take corrective measures to ensure that its aims and objectives are met” says Jain.

He welcomed the Maharashtra Government’s endeavour to create employment through the proposed industrial zones, but was apprehensive of its end results.

“It is heartening to note that state government is trying to give some incentives to generate higher employment. The new Industrial policy is welcome in that sense. However the policy on conversion of SEZ seems to be going nowhere.

Government needs to understand as to why and how SEZs have failed,” he says.

Though there could be many faults at the central government, the state government should on its part try to work out solutions to make SEZ s viable and attractive.

“We have to realize the fact that even the so-called Integrated Industrial Parks will not be successful if SEZ have failed even to take off, despite the concessions granted to them, leave alone achieving desired results,” he adds.

He laments that certain politicians have sought to raise a controversy that the SEZ exit policy would unduly benefit developers.

“It is rather surprising that for petty political gains some people lose wisdom. In SEZ regime, industries enjoy benefits of both direct and indirect taxation, apart from provision for 50% non-processing units, all with just one-rupee-surplus-export formula which is not allowed under the integrated industrial township plan. In such a scenario, why would any developer with any business sense will g in for the township plan? At best the policy will benefit few influential industrialists,” he asserts.

It is necessary that policy makers understand that every industrial or commercial activity needs to be supported by residential infrastructure either within or near the business activity. Globally accepted ball park ration for Industrial activity- to-residential are: Heavy Industry 1:3, Small and medium scale Industry 1:5 and Information Technology 1:9.

Experience in India so far clearly shows that the industry zones will face the danger of mushrooming growth of slums if adequate shelter is not provided.

Internationally, it is a well recognized fact that FAR ort FSI below 5 is just disastrous. Considering the area to be left for infrastructure like roads and open areas, the net FSI will come to around 2 to 2.5 which is quite acceptable as opposed to destruction of green areas, he added.

CREDAI resents government’s stand on LIG housing

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Track2Realty: CREDAI has expressed strong resentment to the Union Government’s proposal for compulsory reservation of 35% of dwelling units built for the economically weaker sections (EWS).

“Such a directive, without any incentives to the developer community, would only burden the open market buyers, mainly the middle income group, which will be forced to cross-subsidise the LIG or EWS” said a CREDAI memorandum to Union Minister for Housing and Poverty Alleviation, Ajay Maken.

CREDAI, with over 8,800 members across India has sought time with Maken to discuss the various issues concerning the housing industry.

CREDAI National President Lalit Kumar Jain said the government should model the housing policy to suit the poor in such a way to encourage developers to rush for it rather than taking compulsory steps which ultimately might be counterproductive as they could lead to a fall in the housing stock.

The demand-supply mismatch is one of the reasons for the market price movement and any further fall in the housing stock will only contribute to rise in prices, CREDAI argued.

Central guidelines must have a systematic and rational approach on incentives, cross-subsidization and be aimed at solving problems in a practical manner. For instance, reservation for EWS/LIG is not possible in every project across the board as maintenance will be a major issue.

High rise buildings with lifts and other amenities push up not just the cost of the project, but also the subsequent maintenance.  Most LIG or EWS families might not be able to bear the high maintenance cost which would mean that the MIG and others might have to bear the brunt. The EWS and LIG categories will have to be given walk-up apartments which will not be more than four-storey high and this in turn could pressure in FSI.

HUPA (Ministry of Housing and Urban Poverty Alleviation) should take up the issue of reduction of cost of funding with the Finance Ministry so that developers would b e incentivised to construct houses for the poor segment. The centre should also ask the state governments to exempt EWS & LIG from registration fee and stamp duty.

Right kind of policies will encourage developers to create the required EWS & LIG housing stock, lessen the burden on precious government resources and ultimately lead to improvement in quality of life for the lower strata with proper water supply and sanitation.

CREDAI called for creating special housing zones with tax exemptions on the lines of SEZ. These zones should have tenements to the extent of 75% for below 80 sq mtr. The area required for the special housing zones could be ten acres with a minimum FSI/FAR of 4 to allow large scale construction to meet the rising demand.

The housing for all policy would also require solid back up with all round reforms, quick clearances and minimal interference from other government departments like environment, CREDAI said and suggested mass rapid transit system for improving public transport. Otherwise people would be forced to spend most of their quality time only in commuting to and fro their places of work.

CREDAI asks builders not to pay bribe to officials

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Track2Realty-Agencies: Ironic it may sound, but the developers are getting hurt by allegations of corruption in the realty sector. Confederation of Real Estate Developers’ Association of India (CREDAI) has asked its about 10,000 members not to pay bribe to officials for getting project clearance.

“We have had enough of these charges that builders breed corruption,” CREDAI President Lalit Kumar Jain said in a statement. He was addressing the CREDAI’s national convention at Barcelona that concluded on Thursday, Oct 4.

“Launching an all out war on corruption, developers’ apex body CREDAI has called upon its 10,000-strong members to stop paying bribes to officials for getting clearances,” the statement added.

Jain said that a survey was conducted among the developer community on saying flatly ‘No’ to corruption. Many members positively reacted and some said: “Together, we shall”.

“We take 18 to 36 months from change of land use to commencement of work and these delays contribute up to 40 per cent of the sale price. I have heard stories of developers’ exploitation and how the corruption has reached its pinnacle,” he observed.

Jain urged developers to gear up and resist all kinds of exploitation and demands for bribes, expose bribe seekers and even move courts with writ petitions and complaints.

From the government, he demanded administrative reforms to check the menace of corruption.

CREDAI President noted that mission transparency launched by the association has been accepted well and a majority of developers across the country have accepted the CREDAI’s code of conduct for themselves.

That apart, various state and city units of the industry body are setting up consumer grievance cells to pro-actively settle disputes out of court.

“Similarly, one day all developers will say no to corruption and the day is not far off,” Jain said, adding that the onus to fight corruption is particularly much more on the young developers than the older generations.

He informed that governments in Karnataka, Andhra Pradesh and Chattisgarh have started moving to set up single window system for building clearances.

Many state governments are discussing the comprehensive check-list presented by CREDAI for giving project clearance through single-window.

Quoting a McKinsey report, Jain said the total shortage of dwelling units in urban areas will be 38 million units by 2030 in comparison to 24.71 million in 2007.

“The economy will have to build between 700 million and 900 million square meters of residential and commercial space a year in order to meet urban demand,” he said.

CREDAI’s Nashik realty expo to be held in December

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Track2Realty-Agencies: With an aim to showcase properties across Nashik under one umbrella and provide buyers the opportunity to purchase real estate in Nashik the Confederation of Real Estate Developers’ Association of India (CREDAI) has organised a mega realty expo called ‘Shelter’ in the city from December 20-23.

Around 100 developers from across the city are expected to participate in the event, showcasing around 300 residential properties, featuring 5,000 flats, row houses and bungalows.

The expo is timed in keeping with the Diwli holiday season which sees a spurt in real estate transactions. The expo will have around 212 stalls, including 114 stalls for builders, while the rest of the 98 stalls will be for building materials companies.

Kiran Chavan, President, CREDAI Nashik, said, “The realty expo- Shelter is our biennial event and this is our eighth event. Nashik was highlighted after the commencement of the realty expo- ‘Shelter’. The expo will showcase around 250 to 300 building projects, with around five to six thousands properties (units)- including flats, row houses, bungalows and duplex. Our aim is to showcase the properties under one umbrella that will help those who are in search buying home of their dream within the budgets.”

Participation of more than 100 builders will naturally create a competition. As a result, customers will get properties at reasonable. Customers can also compare the features and fixtures of the properties showcased at the exhibition.

The customers from Mumbai and Pune generally don’t have proper channel to get the properties of their choice. But, ‘Shelter’ will also be a platform for such outside customers.

Presently, there is slowdown in the market. Most of the projects are under construction and booking are less comparatively. CREDAI believes the real estate market is expected to start picking up from Dasara to Diwali.

CREDAI sets up realty institute, offers scholarships

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Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, credai, Pune training school, construction labourers training schoolAiming to promote excellence and bring in global standards in real estate arena, developers body CREDAI has announced an institute for research & professional studies and educational scholarships for needy students pursuing higher education.

The CREDAI Institute of Real Estate Research and Professional Studies will be set up at Ahmedabad near Kensville Golf and Country Club adjoining the renowned iCreare-the International Centre for Entrepreneurship and Technology.

Announcing the institute Lalit Kumar Jain, National President of CREDAI said Jaxay Shah, Vice President of CREDAI and Director of Savvy Infrastructures Ltd, has donated land for the Institute.

Kumar Urban development Limited (KUL) headed by Jain himself, has committed Rs. 1 crore for the Institute’s building. Several other leading developers too expressed their support to the cause of education, he said.

The CREDAI institute, aiming at imparting world class education and research in real estate related subjects, will be functional from June 2014. It and will have tie-ups and affiliations with top International Institutes having expertise in real estate domain.

CREDAI has also announced the launch of an Educational Scholarship Scheme (ESS) for promoting higher education by offering scholarships to deserving students who are pursue full-time degree/post-graduate degree courses in Civil Engineering or Management Degrees related to real estate sector at any of the colleges or institutes recognized by the All India Council of Technical Education (AICTE).

CREDAI has taken up the education initiative to encourage youth to play a major role in the nation building activities. Real Estate and construction industries support over 250 other industries and contribute 11% to the GDP, thus playing a pivotal role in the nation’s economic development. “It is the largest employer after agriculture. Hence CREDAI has taken up the initiative to enhance skill sets and promote talent,” Jain said.

The ESS will primarily target economically under privileged, but academically bright students and help them complete their professional education so that they can embark on a bright career path.

“Often bright students are forced to give up their education as their families cannot afford the expenses on higher education. ESS will help students break their families’ generations old cycle of poverty and harness their talent to make them productive members of society,” Jain said.

CREDAI will fund the seed capital or initial contribution for obtaining educational loans from banks.

CREDAI presents blueprint for housing surplus

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Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, credai, Pune training school, construction labourers training schoolPointing out that real estate development can revive the sagging economy, developers’ apex body CREDAI has called for launching a mission to make India Housing Surplus from the current status of a housing deficit nation by 2020.

Real Estate supports 250 industries, generates employment and contributes 11% to GDP, CREDAI national President Lalit Kumar Jain said a statement today..

CREDAI also has written an open letter to the Prime Minister and set an 10-point agenda of action for taking the nation on an accelerated growth path while solving the housing problem faced by millions of people across the country.

Pointing out that the economic liberalisation initiated by Prime Minister Dr Manmohan Singh as the finance Minister in 1990 have not covered the real estate sector, CREDAI called for comprehensive reforms for the sector covering land, administration, banking and tax.

CREDAI reiterated its long standing demand for a Single Window clearance system and pointed out that McKinsey has said in its report to the Government of India that delays in approval processes alone increase sale value of houses by 40%. Delays due to multi clearances/approvals numbering over 40 by various Agencies/Departments of the Government – the average time being 18 months – are the order of the day though most of the Departments have the same series of check lists. This obviously leads to duplication of submission by architects. In fact, the number of building plans sanctioned over the past ten to fifteen months has drastically come down.

The only way forward for a clean and cost effective housing sector is an e-based standardization of single window approval process. CREDAI has submitted a Single Window Act for consideration to Ministry of Housing (HUPA) and Ministry of Urban Development. However, there has been no progress at all, Jain said.

Presenting CREDAI case for close coordination among various government departments, he said the various Central and State Government Departments are issuing directives in isolation. For instance, the Environment Ministry issued Building Approval guidelines authorising its Committees to link the height of a building to its distance from a Fire Station, though the Ministry is neither the technical nor the administrative head of Fire Safety issues! Such arbitrary exercise of power by MoEF has crippled the sector due to approval delays, adding to costs.

“Sir, we developers are entrepreneurs, conducting our business to the best our ability. We too hate the system that labels us as crooks, cheats and breeders of black money. Few people seem to realise that we are victims of the system and not beneficiaries or generators of black money for that matter,” he said in the open letter to PM.

He pointed out that developers are forced to deal with 140 officials at various stages to obtain 40 plus clearances and history is witness to the fact that corruption creeps in wherever there is a human interface. “Files are not cleared unless one greases the palms,” he lamented.

On land reforms, CREDAI said restrictive land use has led to raising the cost of the tenements, killing agriculture land, reducing Green cover and made physical infrastructure costlier. It is high time the policy makers consciously shed their skeptical, narrow views on land use. Andhra Pradesh has set the right trend by removing the concept of FAR leading to stabilization of prices and creating adequate supply.

The current home loans for affordable housing segment with 1% interest incentive is still very costly for many needy people. The interest rates on home loan, especially in affordable category, cannot and should not be more than 7%. Also, the current guidelines by the Reserve Bank are anti-housing industry as the cost of finance is very high that in turn makes housing costlier.

Currently, any purchase of housing unit costs @ 36% in direct and indirect taxes which include VAT, Service Tax, Excise Duty and Municipal Taxes etc., At this rate, one has to earn 150% of one’s current income to be able to afford a house and end up paying a heavy income tax of 32%!

There is a need to devise a special tax-free affordable housing project scheme. Though there will be seemingly a revenue loss, this will be more than offset by the collection of other indirect taxes, he said.

Delving on slum rehabilitation, CREDAI said as much as 15% of entire population of this country lives in slums. Few urban areas in state like Maharashtra have come up with slum rehabilitation policy. However, these policies fall short of expectations to achieve desired results, mainly because they are impractical. Also, the Rajiv Awas Yojana in its present form cannot achieve desired results. “What we require is slum lord free environment where all the slum-dwellers attaining majority age of 21 get their own rightful homes,” Jain argued.

These issues cannot be resolved by routine administrative remarks on files like “Please attend to” or “for your attention please”. Housing is a State subject. Even at the centre, housing policy making is fractured between two Urban Ministries, and several other Central Ministries which dabble into the matter at their own sweet will without even referring the matter to either of the Urban Ministries.

From the point of accountability, CREDAI suggested that for every building proposal submitted, there should be a mention of Revenue to be generated, Employment opportunity created, contribution to GDP, along with the date of application submission and the date of final approval. In case of delay, those responsible must be punished.

CREDAI said India’s urban population has grown from 290 million in 2001 to 377 million in 2011 which accounts for over 30 percent of the country’s population. The number of cities and towns has also increased from 5,161 in 2001 to 7,935 in 2011 – a 51% growth. The number of 1 million plus cities has grown from 35 in 2001 to 53 in 2011, registering a 45% growth.

By 2031, India will have more than 87 metropolitan areas and the country’s urban population is likely to soar to over 600 million, adding about 225 million people to present urban population.

“If this goes unchecked and unattended, we will have an explosive situation of hundreds of slum colonies everywhere because housing has become unaffordable,” Mr Jain said.

“Sir, we have been trying to seek an appointment with you for long since we cannot hope to achieve anything tangible without your intervention. We have already made several representations to all the concerned ministries but with no positive response,” the open letter said.

“It is in this context that, Prime Minister Sir, we would like to urge upon your honour to pay an immediate attention to the Future Shock scenario and take concrete steps to tackle the crisis,” the letter added.

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