Union finance minister Arun Jaitley has his eye on the real estate sector, and rightly so. It is a significant driver of India’s informal economy in terms of the jobs it creates. And it is a large-scale enabler of India’s shadow economy, a nexus for black money transactions. Jaitley mooting the idea of bringing it under the ambit of the goods and services tax (GST) is, therefore, logical.

But formalizing and cleaning up the sector are mid- to- long-term objectives. The short-term outlook is a little different. Demonetisation and the Real Estate (Regulation and Development) Act, 2016, or RERA, have both hit the sector hard. The stalling rate has spiked over the past three quarters, hitting levels unseen since the global financial crisis.

This is not to say that it shouldn’t be brought under GST. But the compliance costs and regulatory burden must be kept as low as possible. And it should be understood that such efforts notwithstanding, further disruption is likely to hit the already struggling sector. Given that it’s the country’s second largest employer, the ripple effects could spread far.