On the argument that real estate development is the best driver for mass job creation in a short span of time, the government might finally give industry status to the sector in its Budget for 2018-19. This has been the real estate industry’s long-standing demand.
“A midsize affordable housing project gives employment to at least 2,000 to 3,000 people, direct and indirect. Bigger projects require more people. This is a two-pronged plan. Not only we will help get more people affordable housing but also help millions get employment. We think this year the finance ministry would give its nod (for industry status),” said a senior urban development ministry official. If the status was granted, the official added, developers would be able to get finance at single-digit interest rates, between five and nine per cent. At present, it is 10-15 per cent.
Other sources say the finance ministry, understanding the need to boost the numbers of indirect and ancillary jobs, has decided to grant the demand.
“The past year has witnessed a lot of change in the sector, with enforcement of the Real Estate Regulatory Act. The sector has streamlined a lot and mostly players who fulfill all criteria remain.
There is seriousness in the sector that might have been missing earlier,” added an official. “We estimate in the next two years itself, over 1.5 million new jobs can be created as more real estate development projects will come up.” Experts say real estate has been marred by a lack of consumer confidence due to stalled projects, leading to a fall in demand and demonetisation, among other things. The hope is that industry status might help a turnaround.
“Real estate is one of the key gross domestic product contributors and fourth largest employment generator in India. Extending industry status to the entire sector will help developers to raise funds at lower rates and, in turn, reduce their project costs, which will help in pushing demand,” said Anuj Puri, chairman, Anarock Property Consultants. Additionally, its inclusive growth will help in generating employment across various sectors which are directly or indirectly related to it.”