Real estate has been a significant contributor to the socio-economic development. Real estate sector is the major employment provider in India second only to the agriculture sector. The sector’s ancillary industries numbering hundreds influences the economic structure of this country.
Since time immemorial, real estate has directly or indirectly been the root cause of various conflicts. Given the significance, the real estate sector acted as a catalyst in the vicious cycle that played through the cause and during the existence of the great recession that affected the European Countries and the United States of America. However, the Indian real estate sector is unmindful of the challenges that stare back in the form of poor infrastructure and unplanned urban development due to archaic laws and bureaucratic stranglehold while, India still is making efforts to address the after effects emanating from the global economic crisis.
Like is the case with most developing economies, the real estate sector is grappling with functional characterization as an alternative economy which faces substantial gap between the demand and supply of housing, both in terms of quantity and quality of affordable housing with special reference to urban areas which have in turn given rise to proliferation of slums in such areas. To date, the realty sector in India is unorganized & less regulated. Realty business serves as an untamed paradise for developers, with little accountability and no moral watchdog. India since its independence witnessed mushrooming of unauthorized construction which not only has lead to congestion, proliferation of slums but also degradation of the urban living standards. The current infrastructure is unable to cope with the burgeoning population. Not only are green areas being blatantly encroached upon, but also there is a severe shortage of basic amenities. The archaic laws and the bureaucratic throttle over all urban development activity have given birth to a vicious nexus between builders, deep rooted bureaucracy and other vested interests, invariably leading to violation of prescribed town planning norms and such other prescribed standards. As a result houses have become unaffordable beyond a common man’s reach.
The sector of real estate is one where law and business often meet. A unit increase in construction expenditure generates five times the income, having a multiplier effect across the board. The business on one hand has constantly grown across India but unfortunately on the other, the laws governing it have not kept pace with changes. Century old legislations govern matters of transfer of property and such other related edicts relating to registration, easement and stamping. Real estate development, transfer and ownership of flats as covered by the existing laws, including those for co-operative society’s apartments, condominiums, registration and stamp duty etc. have stifled the growth of this sector. Due to the lack of a robust regulatory mechanism and speedy litigation process, consumer rights have been at the receiving end in transactions. The lack of a central regulator for this sector makes the situation grimmer. This has created a huge gap between the business enterprises and the law.
Though now courts have recognized ground realities and the judgments are being pronounced which offer more practical solution to the issues, which have been a bane for decades. Some recent proposed bills bring promise and are a result of various recommendation of the Apex Court for enactment of such laws. Hence, a need is felt to overhaul the current legal system governing the real estate sector with more liberalized and investor friendly legal system. Recent attempts to revive the regulatory system especially through the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 & recently passed bill by the cabinet the Real Estate (Regulation and Development) Bill, 2013 are signaling towards a better future. Side by side major reforms are needed such as remodeling of urban development policies including revamping rental laws, town planning regulations, particularly the critical aspects such as increase in FAR, height relaxation, rationalization of density norms etc. All this reforms must cater to the requirements of not just decades but centuries ahead. These gigantic tasks cannot be accomplished by either the public sector or private sector alone. Therefore cooperation and coordination from both public & private in the form of public-private partnerships is need of the hour.
