On the rise: fraud, crime & corruption
With the Indian housing market fast coming of age, its seedy underbelly fed on crores in black money has also grown proportionately, reports Cooshalle Samuel.Updated: Oct 28, 2007 16:27 IST
With the Indian housing market fast coming of age, its seedy underbelly fed on crores in black money has also grown
proportionately. With small cities becoming flourishing real estate markets, the 60 to 40 or 50 to 50 ratio of black to white money in real estate transactions is today an established and more or less a socially accepted act.
Jyoti Trehan, Additional Director General of Police, Punjab and author of a seminal book on crime and money laundering in India, notes that economists estimate that black money constitutes 50 per cent to 60 per cent of the GNP if calculated on the thumb-rule that the black money component in a real estate transaction is a fairly accurate measure of the black money in the economy.
But it isn’t just the black money, the resultant crime and corruption that it breeds is the main cause for concern. The deep-rooted collusion between government officials, the mafia and builders have helped many underworld dons such as Dawood Ibrahim build multi-crore concrete empires across India.
In Mumbai alone the D-company is reported to have amassed property worth hundreds of crores with Dawood personally owning at least 11 properties and his front man in Delhi, Romesh Sharma owning properties worth Rs 500 crore, according to various police estimates. Many of Dawood’s other gang members are reportedly running protection-money rackets, harassing builders and buyers alike.
Consumer activists believe that more than 250,000 buyers have filed cases in consumer courts alone against builders who have sold them dubious houses and lands, according to figures compiled by NGOs. And this is just the tip of the iceberg since lenghty and complicated litigation procedures have left lakhs of home owners running from pillar to post.
As a result buyers have no option but to resort to indirect means such as bribery, as discovered in the The India Corruption Study – 2005, conducted by the Center for Media Studies in collaboration with Transparency International. The study which reviewed eleven public services across twenty states, shockingly found land administration to be the most corrupt public service, second only to the police.
The study found that 48 per cent respondents had directly paid bribes and 37 per cent had to use influence or middle men to get their work done. Out of those who paid bribe, nearly half had paid for property transaction related issues (valuation of property, payment to registrars etc), 36 per cent paid to get property documents and 12 per cent for clearing or settling tax dues.
And it isn’t just the aspiring house owners who are being duped, these brazen scamsters are even taking on banks. RBI’s Trend and Progress Report 2005-06 attributes the 77 per cent increase in banking frauds, from Rs 779 crore in 2005 to a staggering Rs 1,381 crore, to a sharp rise in housing loan frauds perpetuated using forged title deeds of properties and inflated salary certificates.
This lack of ethics and accountability in India’s property market is also documented in the Jones Lang LaSalle’s 2006 Real Estate Transparency Index, which ranks real estate market transparency in 56 countries. The latest Index notes that while increased availability of market information, improved general accounting and legal
information among market participants has helped India graduate from the low to the semi-transparent tier, much remains to be done before this sector actually becomes capable of solving India’s growing housing problems.
First Published: Oct 28, 2007 16:26 IST