"We welcome the passage of the Real Estate (Regulation and Development) Bill in Rajya Sabha that aims to bring in transparency and protect the interest of the consumers. Though the objectives are noble and correct in the long term, we believe lack of clarity on the various mechanisms proposed will only add to costs through delay, making projects not only more expensive, but ensuring that affordability continues to be a distant dream.
On the positives, the bill does justice to its prime cause of protecting the interest of the consumers through setting up of regulatory authorities in each state, mandatory registration of all real estate projects, providing additional avenues for grievances. This will bring in a systematic approach and enhance transparency thereby giving a boost to domestic and foreign investments which will aid growth of the sector.
However, the bill has failed to bring the government authorities into the ambit who are responsible for the continuous changes in regulations, lack of transparency and predictability in functioning. The bill is therefore incomplete in its approach, and the outcome of this is going to be more expensive products for consumers. Placing 70% of receivables in an escrow account in an economy with such high interest rates is going to lead to a complete shift in the business model of many companies. Owing to lack of holistic approach, the end price to consumers will continue to rise, putting a severe strain on affordability.
In June 2015 The Doing Business Report published by the World Bank ranked India 183 out of 189 countries in Dealing with Construction Permits. The passage of the bill adds to the layers of bureaucracy and timeline and puts pressure on an already strained sector"