Checks and balances needed for realty sector
The CBI probe into the Tata-Unitech land deal shows that the realty sector is still by and large unregulated. There is no functioning land market in India and prices of land and projects are apt to be concealed or simply misrepresented.comment Updated: Aug 26, 2014 22:50 IST
The CBI investigation into the Tata-Unitech land deal, while principally focusing on the 2G scam, in the sense exploring whether the money paid by Tata Realty to Unitech was used to buy spectrum, also brings to light another sad fact. It is that realty is still by and large an unregulated sector. There is no functioning land market in India and prices of land and projects are apt to be concealed or simply misrepresented, with the result that the sector has become the largest generator of black money. Since the scope for window-dressing is so much present, the probe authorities will be at pains to join the dots.
What ails the real estate sector in India? At present there is the problem of too many approvals and, as a consequence of that, lax supervision. And when the institutions of authority are not in place, bribery comes to occupy a central role, which is perhaps more evident in this sector than anywhere else. Land finds mention on the Union List, State List and Concurrent List of the Constitution, and hence there is the possibility that legislation on this may be conflicting in nature, leaving too much discretion in the hands of the authorities. All recent cases — like the Supreme Court ordering the demolition in a Supertech project in Noida for wrong designing, poor building material causing a major building collapse in Chennai, or illegal constructions in the Okhla bird sanctuary — tell the same story of not only the developers being unaware of some specifications of their job but also the authorities not knowing who should do what and at which stage. Only after the recent Chennai building collapse did it transpire that only a structural engineer could certify that a project had been completed. Very often that does not happen, and when it sometimes does, there are questions about his competence to do so.
It is a pity that the Real Estate (Regulation and Development) Bill, 2013 has still not been passed by Parliament, and some suggestions given by the Rajya Sabha are yet to be carried through. The Bill provides for state-level real estate regulatory authorities because land is a state subject. Though it is nobody’s case that the Bill will be a panacea for all ills plaguing the sector, some processes can be streamlined — and that way it will cease to be a sector for parking ill-gotten money.