Thaindian News

Mumbai, May 29 (IANS) A top realty developers’ association Tuesday castigated the central government for targeting it as one of the prime investment destinations for those with black money.

Reacting to a White Paper on Black Money released by Union Finance Minister Pranab Mukherjee, the Confederation of Real Estate Developers Association of India (CREDAI) said that builders and developers have been reduced to a favourite punching bag, whenever there is talk of black money in the country.

The real estate developer community has become a favourite punching bag for many whenever they talk about the national curse. Everybody talks about black money, but nobody does anything about it, lamented CREDAI president Lalit Kumar Jain, addressing the media here.

While appreciating Mukherjee’s attempts to focus on the issue, Jain termed it as unfortunate that the white paper picked on the realty sector and dealt with a couple of issues like stamp duty as the only cause of the problem if black money in the economy.

“We, too, hate the system that labels us as crooks, cheats and breeders of black money,” Jain declared and called for realising the fact that the various bottlenecks at government level at central government and in several states are equally responsible for this menace.

He explained that the economic reforms initiated by Prime Minister Manmohan Singh when he was the Finance Minister over 20 years ago have seen the end of the License Raj, but the real estate sector is still governed by controls and increased controls.

For instance, CREDAI has been repeatedly pointing out that there are over 40 clearances a developer must get before starting any project.

Real estate is a highly capital-intensive industry and any delay at any stage obviously gives rise to palm-greasing as the developer wants to finish his project on scheduled to avoid cost escalations, Jain pointed out.

He added that land transactions, corruption related approvals and licence process, power in the hands of officials who threaten to stop work, the political system and the taxation system are the other factors responsible for corruption and the problem of black money.

Citing a McKinsey Report to the central government, Jain said it pointed how costs incurred on various approvals constitute nearly 40 percent of the sale value of the property.

While conceding that the realty sector constitutes about 11 percent of the GDP, Mukherjee had said that large number of transactions in the real estate sector are not reported on account of very high levels of property transaction taxes, commonly in the form of stamp duty.

The minister had said: Investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported. This is mainly on account of very high levels of property transaction taxes, commonly in the form of stamp duty. High transaction taxes in property are one of the biggest impediments to the development of an efficient property market.

Jain countered by saying that “we are the victims of the system, not the beneficiaries” and reiterated his plea for a single-window clearance of all development proposals in the interest of the industry and the people at large, and help the governments efforts to create affordable housing stocks.