The bill envisages the creation of a regulator for the real estate sector who is empowered to penalize and prosecute errant developers. It will be presented to Parliament during the ongoing winter session.
The move is expected to restore consumer confidence in real estate, potentially triggering a revival in the sector.
“This is a step in the right direction. It will go in favour of consumers as well as developers who do clean business," said Anuj Puri, chairman, Jones Lang LaSalle (JLL) India, a real estate advisory, adding that this will bring in transparency to the sector that will also attract foreign direct investment (FDI).
“If you look at markets such as the UK and Australia, they attract huge FDI in housing as they are transparent," he added.
According to JLL’s global transparency index, India figures somewhere in the middle, around the 44th position in a survey of 90 countries. China, which was behind, has now moved ahead to the 35th position.
Arguing similarly, Sanjay Dutt, managing director, Cushman and Wakefield India, a property advisory, said a regulatory bill will revolutionize the Indian real estate sector and bring it on par with those in developed nations.
“This will bring in some entry barriers, which didn’t exist till now, making the business speculative," Dutt said. “However, it is pertinent that the government too helps in implementing this bill by making state governments accountable and making the approval process simpler and faster."
The bill, according to an official statement, aims to enhance the credibility of the real estate sector by restoring confidence of consumers in the sector, promote transparency and accountability, and encourage orderly growth through efficient execution of projects, professionalism and standardization.
Among the major recommendations is the mandatory registration with real estate regulatory authorities of projects of at least 500 sq.m area, or eight flats, instead of 1,000 sq.m, or 12 flats, proposed earlier. This enables registration of more projects with the regulatory authority and will protect more consumers.
Project developers will also now be required to deposit at least 70%, including land cost, in a separate escrow account to meet the cost of construction. Their inability to do so has affected thousands of customers across the country, and also resulted in poor demand for new housing projects.
Regulatory authorities can register projects to be developed beyond urban areas, promote a single window system of clearances, and grade projects and promoters besides ensuring digitization of land records. They will also have to draft regulations within three months of formation, from the six months proposed in an earlier version of the Bill.
Among the changes made to the Bill from its earlier version in December 2014 is a provision for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of appellate tribunals or monetary penalties or both.
Appellate tribunals will be required to adjudicate cases in 60 days as against 90 days proposed earlier and regulatory authorities will have to dispose complaints in 60 days while no such time limit was indicated earlier.
Irfan Razack, president, national, of industry body Confederation of Real Estate Developers’ Association of India, said that while the intent of the bill is good, it leaves a lot of scope for confusion.
Separately, the cabinet on Wednesday approved a slew of decisions which will end up impacting fields as diverse as jute production, shipbuilding and pulse production.
It approved official amendments to The National Waterways Bill, 2015 which will lead to 106 additional inland waterways being elevated to the status of national waterways. This will take the total number of national waterways to 111. This will enable the Inland Waterways Authority of India, under the federal government, to develop feasible stretches for shipping and navigation even as the right over the use of water and the river bed remain with the state governments.
The expectation is that the development of these national waterways will enhance industrial growth and promote tourism. Inland water transport is one of the most cost-effective and economical modes of transport.
The cabinet also focused its attention on shipbuilding and ship repair under the ‘Make in India’ initiative, approving several measures ranging from financial assistance to allowing Indian companies the first chance to supply ships to the government.
The implementation of this policy requires a budgetary support of ₹ 4,000 crore over the next decade.
In a move which will spell relief for jute workers, the cabinet committee on economic affairs (CCEA) gave its approval for the mandatory use of jute in packaging for 2015-16.
The decision is expected to provide relief to 370,000 workers employed in Jute mills and ancillary units. The government is required to provide for the compulsory use of jute packaging material in the supply and distribution of certain commodities under the Jute Packaging Materials (compulsory use in packing commodities) Act 1987.
This is in the interest of production of raw jute and jute packaging material.
The soaring price of pulses has been an issue of concern not just for the common man but also political parties. Perhaps keeping that in mind, the Cabinet Committee on Economic Affairs has approved the creation of buffer stock of pulses, to be created in the current year itself: 50,000 tonnes from the pulses from kharif (monsoon) crop 2015-16 and 100,000 tonnes from the rabi (winter) crop of 2015-16, through Food Corporation of India, National Agricultural Co-operative Marketing Federation of India Ltd and other agencies. It has also approved the import of pulses if the need arises.
The move is expected to check food inflation and encourage farmers to take up pulse production with self-sufficiency in a few years being the final goal. The ministry of agriculture has identified lack of availability of new varieties of seeds as one of the main hurdles in increasing productivity of pulses.
In a bid to promote cultivation of pulses in rabi 2015-16 and summer of 2016-17 the government has taken steps that include allocation of an addition ₹ 440 crore, apart from introducing a special programme for demonstration of new varieties of pulses through Krishi Vigyan Kendras.
Mayank Aggarwal, Nikita Doval in New Delhi and Madhurima Nandy in Bengaluru contributed to this story.