The doyens of the country's real estate sector — K P Singh of DLF and Ramesh Chandra of Unitech — recently met top UPA government functionaries to seek higher tax breaks on housing loans and easier lending by banks to the sector. The meeting comes in the wake of these companies seeing a massive erosion in their market capitalisation.
Singh and Chandra recently came together to call on a leading UPA minister and top Congress politician to sound him out about the travails of the real estate sector, which has seen realty prices falling and credit for builders disappearing. Both DLF and Unitech, the firms listed on the Bombay Stock Exchange, have seen their scrip dropping over 80-90 per cent since January this year. The duo is expected to meet other authorities too.
At the centre of this lobbying is the developers’ belief that a housing market crash in India would spell further bad news. “The top five real estate developers currently are providing direct and indirect employment to nearly 250,000 people across thousands of sites in the country. The impact of a depressed market will not be only felt on our share values, but also on jobs and the overall economic growth,” said a developer close to the effort to convince the UPA to ease up things for homeowners and developers.
The realtors want the UPA to push for policy amendments, which would see banks lowering the risk weight attached to investment in the real estate sector. In 2007, the central bank had increased the amount of money that banks set aside as a proportion of their total lending to the sector.
Separately, it also raised interest rates in order to control inflation, a cycle that was only recently broken in order to ease liquidity in the financial system.
“We are really an industry. Yet, we are not treated as one. We create infrastructure, but the norms are skewed against us. The government earns so much revenue from us in taxes, but continues to look down upon the sector as a bubble that needs to be broken,” the developer added.
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UPA sources confirmed that Singh and Chandra had come calling to explain their difficulties.
Realising the success that other sectors like civil aviation and telecom have had by lobbying with the government, real estate developers are expected to continue their lobbying effort. Already, several mid- and small-size developers in the National Capital Region of Delhi are meeting once a week to evolve a common agenda.