Will real estate projects get an e-clearance?
Narendra Modi once made a statement, “Economy is bleak without Infrastructure. Hence, the prime focus of my government is Infrastructure.” With Modi taking the charge, these words are actually transforming into action.
As per a report by the Prime Minister’s Project Monitoring Group (PMG), currently industrial projects worth over Rs 14 trillion are stalled due to requisite clearances. And this number is constantly increasing. Thus, as we are already battling with the low GDP, in order to revive the economy it becomes imperative to tackle this issue with utmost seriousness. Interestingly, the recent move for e-clearance by Modi’s cabinet is a giant step in this direction.
For any project, environment clearance has been a major roadblock in the last few years. But not anymore! Taking a cue from the latest fad of the industry of going online, from 1 July environment clearances for the industrial and infrastructure projects will be made online. All forest related clearances will also come under the purview of this online mechanism. For the smooth flow of work, central government is working with the state governments to ensure that the clearance is granted within 60 days.
What if the process is delayed? Well, there will be a provision for penalty as well. However, the details on the same are yet to be out in the public domain. This will bring in much-needed transparency in the system as it will monitor stage-wise approval mechanism. Further, once the verification of the project is done, within four days a password will be generated for the applicant to check the progress.
So, how will it impact the real estate market? Well, as Indian real estate is highly sentiment-driven, only the announcement of infra-projects can lead to the whopping price rise in that particular area. Be it the curious case ofNavi Mumbai Airport or the Bangalore Airport or any other major project, the land values in these area went overboard in anticipation of the upcoming projects. And due to certain issues, when the project gets delayed the realty market of the area becomes stagnant. No housing project will come up as there is no supporting infrastructure and the investors who spent a lion’s share to buy a property in that particular area won’t sell the land in lesser rate. All this results in the stagnant market where no transactions will happen until the construction on the project commences.
Another major step is proposed by the Ministry of Commerce and Industry in order to facilitate smooth flow of the major infrastructure projects. The ministry recently suggested that major government-led infrastructure projects should not come under the purview of the new Land Acquisition Act.
Though good in intent, but there is no clarity as to how the farmers will get the compensation.
E-clearance for real estate projects?
With online mechanism for the infrastructure projects, even real estate sector is hoping for good days ahead of them. The recent decision of bringing Departments of Housing and Urban Poverty Alleviation and Urban Development under the ambit of the same ministry received a positive response from the real estate fraternity. Thus, raising their hopes, developers are now expecting a faster approval process from the new government. As per the recent report by Knight Frank, a real estate consultancy firm, about 285 major projects are stalled due to lack of clearances from various ministries.
“Taking the system online will restraint the corruption in the sector and bring the required transparency which will finally lead to swift completion of work. It will gradually save much expenditure and energy that was being wasted in this entire process. Similar online structure is required for real estate sector too, where developers can upload their project information and display the work progress along with money demand raised to public. This will also help in getting the clearances and approvals without excess wastage of time,” says Prashant Tiwari, CMD, Prateek Group.
“There are two aspects of looking at this move. One, any process in context to the clearances and approvals is a very tedious task in India, as a lot of time is wasted and projects get delayed. Therefore, this mechanism will reduce the approval time significantly thereby speeding up the work. Second, in this eagerness to progress we should not cause irreversible damage to the forests. We should noticeably classify natural forests from the planted forests. Since forest lands are inexpensive, many want forest land for the projects that can be taken up in the non-forest lands,” says Sushant Muttreja, CMD, Cosmic Group.
The last word
If single-window clearance becomes a reality, real estate sector will definitely go one notch up. Now let’s just wait till July 10 for FM Minister Arun Jaitley to open his budget box for the current fiscal. Till then we can take solace in the government’s e-clearance mechanism for the Infrastructure projects.
SOURCE: commonfloor.com (http://www.commonfloor.com/guide/will-real-estate-projects-get-an-e-clearance-43811.html)