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NDA’s Bihar debacle proving blessing for realty


New Delhi: Contrary to the general impression, the defeat in the Bihar assembly elections has not dealt any blow to the reforms agenda of the ruling National Democratic Alliance. Rather, it has proved to be a blessing in disguise for the Prime Minister Narendra Modi’s government to fast-track reforms – legislative and administrative.

For the realty sector, those that stand out include the move for a pan-India goods and services tax regime and legislation for a real estate regulator, both of which are expected to get the parliamentary nod in the current winter session of parliament.

Close on the heels of the Bihar defeat, the government gave a Diwali bonanza by easing foreign investment norms in 15 major sectors, including construction, and raising the approval limit for the Foreign Investment Promotion Board (FIPB) from Rs.3,000 crore to Rs.5,000 crore.

It removed entry and exit barriers in the construction sector, doing away with area restriction of 20,000 sqm and capitalisation of $5 million and allowing foreign investors to exit and repatriate investment before a project is completed but with a lock-in period of three years.

The government’s sense of the real estate industry is that it should not survive on subsidies but on the strength of the market economy. That’s why it’s focusing on realty reforms aimed at strengthening fundamentals for the sustainable revival of the sector.

The delayed reforms had affected the market sentiment and the government has been receiving a lot of flak for its inability to check retail inflation and generate employment.

The government realises it is imperative to provide momentum to reforms if it has to leverage strong domestic growth in the form of healthy seven percent plus GDP growth in the coming fiscal, besides picking up manufacturing activity.

The assessment of global rating agencies like Moody’s weighs heavily on the government’s mind that delay in reforms may hit investment. The Organisation for Economic Co-operation & Development (OECD) has also emphasised that India’s growth prospects remain relatively robust provided further progress is made on implementing structural reforms.

The government is focusing on triggering investment. By exercising tight control over unproductive expenditure, it has greatly increased capital investment by the public sector. And to further push this, the National Investment and Infrastructure Fund has been set up to leverage public investments.

The government also plans to come up with tax-free infra bonds to broaden the corporate bond market and provide long-term finance for infrastructure. It is also looking at providing tax incentives to spur investment in housing.

Then, FDI has considerably increased and private investment is picking up. The government is also working on simplifying FDI & ECB rules to speed up foreign investment.

It plans to put 98 percent sectors for foreign investment under the automatic route. And, to help the fund-starved real estate sector to tide over the current crisis, the government is working on allowing foreign investments in alternate investment funds (AIFs) and in infra and realty trusts via the automatic route.

The most crucial piece of legislation that has a big bearing on real estate is the GST Bill expected to be passed in the current parliament session, especially as the government has now adopted a collaborative and accommodating approach.

The introduction of a single GST rate across the country is aimed at dismantling the inter-state fiscal barriers to create a common market within India to boost competitiveness and make it easier to do business.

It will result in simplification and uniformity of taxes, putting an end to tax inefficiency in the form of different state-specific VAT and service tax laws. Though there are two main taxes for home buyers – VAT and service tax – multiple taxes in the form of CST, custom duty, excise duty and the like paid by developers result in price escalation by about 25-30 percent.

A likely GST rate of about 20 percent (the Congress party is demanding a cap on 18 percent) should be quite beneficial for the sector in lowering the current tax burden, in turn resulting in the reduction of home prices. Separately, the government proposes to provide tax relief to the real estate sector in the budget for 2016-17.

The decks are already cleared for crucial Real Estate Regulation & Development Bill, 2013 in the winter session as the government has accepted changes proposed by a Rajya Sabha panel. This bill will give a major boost to real estate sector, bringing in fair play and transparency in transactions to safeguard the interests of buyers and investors.

The government, which has already streamlined environment clearances for improving ease of doing business, is now fast- tracking single window clearance system for multi-storied buildings that should come through by early December 2015.

The simplified process will considerably cut delays in granting approvals, in turn resulting in cost reduction that will benefit property consumers.This will also provide much – needed relief to debt- ridden developers by way of faster projects completions and lesser interest outgo.

For its flagship programme — “Housing for All”, envisaging building 30 million houses, the government is readying a plan to provide more funds for constructing rural houses and providing subsidised power and water. Under its AMRUT programme, the Centre has allocated Rs 11654 crore for infrastructure upgrade.

The Bankruptcy Code — providing for an easier exit for businesses, safeguarding the interests of lenders and investors — together with proposed new start-up policy, will foster new enterprises and fast-track winding up of failed enterprises, with a view of strengthening ease of doing business.Further, labour reforms are aimed at removing rigidity and encouraging employment.

The government’s new-found aggression and resolve to push reform agenda have already seen the BSE Realty Index, registering the most rise in the last fortnight and further reform measures to be unveiled in the budget, will serve to speed up the revival of real estate facing the slowdown.

(Vinod Behl, IANS)

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Come April, government will be more comfortable in Rajya Sabha

Of the 100 BJP-allies MPs, 24 are retiring. Which means, the government will be left with 76 MPs

Parliament of India is a source of interest for many people because of various reasons. Wikimedia Commons
Parliament of India is a source of interest for many people because of various reasons. Wikimedia Commons
  • In April, the opposition may lose its edge over BJP in Rajya Sabha
  • NDA led by Modi has faced many embarrassments in Rajya Sabha in past few years
  • This is expected to change soon

Come April, the opposition in the Rajya Sabha may lose its edge in the numbers game and the power to stall any government bill, as the ruling BJP-led NDA coalition is set to catch up with its rivals, though a clear majority will elude them for a while more.

BJP to soon get more comfortable in  Rajya Sabha. Wikimedia commons
BJP to soon get more comfortable in Rajya Sabha. Wikimedia Commons

As 58 MPs, including three Nominated and one Independent, are set to retire in April, the Rajya Sabha math is going to change. It is set to favour the National Democratic Alliance (NDA), and the trend may continue in the elections to the Upper House later too with the Bharatiya Janata Party (BJP) having solid majorities in a number of state assemblies, especially the ones it won after the 2014 Lok Sabha polls.

With this, while the Congress-led opposition’s numbers will come down to around 115 from the present 123, the numbers of the BJP, its allies and sympathisers together would climb to around 109 from the present 100-odd members.

And the gap, once wide enough to let the opposition invariably have its say, will keep narrowing further in the coming months.

Of the 55 retiring members (excluding those Nominated), 30 belong to the opposition camp while 24 belong to the BJP and allies. Of them, a large number of NDA candidates are set to return while the opposition will lose a chunk of its members.

As things stand now, the Congress-led opposition has 123 MPs (including 54 of the Congress) in a house of 233 elected members (apart from 12 Nominated), while the NDA has 83 members (including 58 of BJP) plus four Independents who support the BJP (these include MPs Rajeev Chandrashekhar, Subhash Chandra, Sanjay Dattatraya Kakade and Amar Singh).

Rajya Sabha or the Upper House can often be a game changer while passing of the bills is in process.
Rajya Sabha or the Upper House can often be a game changer while passing of the bills is in process.

Also, for all practical purposes, the All India Dravida Munnetra Kazhagam (AIADMK), that has 13 members in the Rajya Sabha, is also with the NDA. This means the NDA’s effective strength in the upper house of Parliament is 100.

The gap was wider till just a few months ago. This meant that during any battle between the government and the opposition in the Upper House over bills and major issues, it was the opposition that invariably had its way. The recent example was the triple talaq legislation that the opposition stalled in the upper house, demanding that it be referred to a Select Committee.

For over less than four years, the Narendra Modi government had faced quite a few embarrassments in the Rajya Sabha thanks to the majority of the opposition, forcing it often to take the money bill route to avoid a clash in the house. Under the Constitution, a money bill needs to be passed only in the Lok Sabha and the Rajya Sabha cannot stall it.

Also Read: For Modi, Road To 2019 Will Be Steeper

However, after April, the NDA will be in a far better position.

Of the 100 BJP-allies MPs, 24 are retiring. Which means, the government will be left with 76 MPs (including AIADMK). But at least 30 from the NDA are set to get re-elected. So the number will rise to 106. Add three members that the government would nominate to the upper house and the final NDA tally will roughly be 109 MPs.

Further, there are fence-sitters such as the Telangana Rashtra Samiti (TRS), the Indian National Lok Dal (INLD) and the YSR Congress, which are not virulently against the BJP and would not oppose the government unless for very compelling reasons.

Now, for the Congress and the rest of the opposition, they are set to lose 30 MPs (including one Independent, A.V. Swamy) through retirement and would be left with around 93 members. The Opposition may win roughly 22 seats, which means that its final tally after April is likely to be around 115 members.

Government can now expect some smooth sailing in the Rajya Sabha, coming this April.
Government can now expect some smooth sailing in the Rajya Sabha, coming this April.

The gap has clearly narrowed and the government may not be at the mercy of the opposition during crucial votes and can have its way in the Rajya Sabha if it musters its numbers by deftly wooing “floater” MPs.

The three newly-elected Aam Aadmi Party (AAP) members may remain equidistant from both the BJP and the Congress, though the party is friendly with some of the major opposition parties like the Trinamool Congress.

Also Read: BJP MP Seeks Amendment to the Protection of Children from Sexual Offences Bill

In an interesting development recently, the AAP actively participated in the opposition’s walkout and the day-long boycott of the Rajya Sabha over long intra-day adjournments of the Upper House by Chairman M. Venkaiah Naidu.

The AAP, which was not welcome at any opposition meetings earlier, particularly those held in Parliament House, was invited to speak at a joint opposition media interaction on the day. But nobody can be sure as to how long this bonding would last.

Partywise tally of those retiring in April-May from the opposition’s side include 13 from the Congress, six from the Samajwadi Party, three of the Trinamool Congress, two each of the Nationalist Congress Party and Biju Janata Dal and one each of the CPI-M, the Bahujan Samaj Party and the Jharkhand Mukti Morcha.

NDA has to face many embarrassments in past few years in Rajya Sabha. Wikimedia Commons
NDA has to face many embarrassments in past few years in Rajya Sabha. Wikimedia Commons

From the ruling side, 17 MPs of the BJP, three of the Janata Dal United, one of the Shiv Sena and two of the Telugu Desam Party (TDP) are retiring.

In terms of state-wise vacancies to be created in April, the highest number is from Uttar Prdaesh (9), followed by Maharashtra (6), Madhya Pradesh (5), Bihar (5), Gujarat (4), Karnataka (4), West Bengal (4), Rajasthan (3), Odisha (3), Andhra Pradesh (3), Telangana (2), Uttarakhand (1), Himachal Pradesh (1) and Chhattisgarh (1). IANS