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Economic Survey on Friday took note of the “recovery” in real estate sector, but flagged short-term concerns (hardening interest rates) and need for reforms in areas such as high stamp duty and foreclosure of loans.
“In this emerging services sector, while short-term worries like hardening interest rates need to be addressed, there is also need for some fundamental reforms like tackling high stamp duty issue which makes even honest citizens deal in black money and problems related to foreclosure of loans and the Urban Land Ceiling Regulations Act (ULCRA),” the Survey said.
Global Crisis impact
It observed that the global economic crisis had impacted the Indian real estate industry significantly. But measures taken by the Government to boost demand for residential properties, as also the relaxation in provisioning requirements by the RBI for banks and NHB for Housing Finance Companies (HFCs), had minimised impact of economic crisis, it added.
“The sector has started recovering following the increasing activity in the Indian economy, however, with a fundamental difference. Customers are now going for need-based purchases rather than investment based on the euphoria and hype witnessed in 2007 and 2008,” it pointed out.
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