Indian Economy is highly influenced by real estate. The black money existing in the real estate harms the Economy of India. MHUPA’s regulatory bill will act as a means to reduce the play of “black money” existing in the real estate.
Many real estate developers demand payment in cash at least up to 30 % of the total amount. This denotes to the existence of Black money in real estate industry. The existence of Black money costs India tax worth billions of rupees.
India government is to bring Legislation which will assure more transparency to the real estate dealings. This legislation will be discussed in parliament’s winter session.
The impact of this legislation is under suspicion and doubt. The presence of powerful politicians in most of the illegal transactions are said to be reasons. Real estate builders are aided and abetted by powerful politicians.
Corruption existing in the real estate is more obvious. The builders have to meet many officials in completing the project in time. The higher level direct involvement of the officials causes more corruption. This is the factor which prompted MHUPA’s head Mr. Ajay Maken to push a real estate regulation bill.
Ministry for Housing and Poverty Alleviation -MHUPA head Mr. Maken hopes that his regulator will bring desirable transparency in all real estate dealings.
Jones Lang LaSalle’s CEO of project and development services, Mr. Anurag Mathur opined that the regulatory bill however will not solve out the issue of black money. He pointed that black money is twined with land transactions. Sadly over land transactions the bill has no jurisdiction rights.
Nearly 30 % of total real estate transactions are accomplished using black money, reported real estate consultancy Liases Foras. Real estate books more than a 10th of India’s economy.
Using black money real estate avoids taxes. By doing so it causes greater damage to the Indian economy. The presence of black money can be smelled in every aspect of a project. It starts with land acquisition and even goes beyond the delivery or selling of homes.
For instance, the buyer may be asked to pay in cash nearly Rs.2-Crores for a property worth Rs.6-Crores. The sales agreement might be made for nearly Rs.4-Crore or around.
Some banks lend up to 75-85 % of the total sale price which is per the official records. This in turn increases the trouble of the home hunters who will have to fund nearly 45 – 60 % of the total “actual” cost. So this is really unfair to the buyers.
If the regulator comes in the right way, it will solve out these sorts of issues. The draft demands the real estate developers to get authorization from the regulator. Moreover as per the draft they will have to display to the public details like the actual price of each unit.
Further the regulator suggests that payment should be made through bank accounts which the real estate builder will have to maintain for each of their project.
Hopefully the success of the regulatory bill will depend mainly on the part of politicians. Only corruption free politicians can clean out the black money.