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MODI LED BJP GOVERNMENTS ONE YEAR REPORT CARD

A year ago, Prime Minister Narendra Modis BJP party came into power with big majority
following lots of positive sentiments and was voted to take authority on May 26, 2014. Over the
period of one year, the Modi governance has brought with it many victories and several key
factors are still left in pipeline. Positively all this has helped in progression of economic growth.
However, still there are areas where focus and attention need to be paid to bring in sustained
growth. The first year of the Modi government is one of the best years for India in terms of
liberalization and economic reforms, a top US expert has said. Based on the data and facts from
previous year, the overall growth is picking up pace, though maybe not to the desired extent.
Modi governments promise of Ache Din raised the expectations of the general public and
everybody looked onto the government with new hopes and aspirations. Although the economy
is much better now than what Modi government inherited, there are loopholes left due to which
the government is not able to move as fast as expected.
Indian real estate market is largely driven by sentiments and the stakeholders sentiments
witnessed remarkable improvements during the Modi led BJP government. Under the leadership
of Narendra Modi, real estate sector got many optimistic surprises. The first budget under the
headship of Modi government laid special emphasis on the need of housing which in turn
benefitted the Indian realty market but also missed out on various important elements such as
infra status for the sector, single window clearance system, declaring newer land parcels,
reducing cost of allocation of land and much more. The major promises by Modi government
were the development of 100 smart cities, planning for low cost housing, housing for all by
2022, anti-corruption, amendments to land bill, real estate regulatory bill, FDI and bringing the
new land use policy. Overall, the Modi governance has brought plans and strategies which are
meant for better economic development and growth. The years prior to Modi governance, were
not that good for real estate sector as the sales dropped and inventories rose. On the contrary, real
estate sector got positive results and experienced better outcomes during the second half of 2014
when the new government came into power. Mr. Prithvi Raj Kasana, MD, Morpheus Group,
says; The first two quarters of 2014 had a sluggish market due to political instability across the
country but the last two quarters showed lot of improvements, once a new stable government got
settled. New projects were announced and developers started to clear their inventories due to rise
in positive sentiments. There is a lot of hope from the upcoming years and first quarter of this
year has certainly not disappointed us. It is expected that realty sector will boost under the new
government and will benefit all; the developers, buyers and economy as well.
First two quarters of 2014 had seen property prices freeze, as a result of weakening rupee and
high inflation had a negative impact on spending as well. During second half of 2014 inflation
was kept on a check and fiscal deficit saw improvements thus, property prices showed up an
upward trend. The residential and commercial spaces contributed maximum to the real estate

sector with respect to capital appreciation and demand. Not just this, the owners of commercial
properties were slightly better off as there was increase in rental yields due to rise in capital
values in 2014. The residential property in our country is divided majorly into affordable
housing, mid-level priced houses and the luxury housing. In terms of growth and development,
the NCR regions did not show much improvement in the first half of year 2014 and overall the
year 2014 saw delays in approvals, clearances and finishing projects and meeting targets; and as
a result there was a backlog of unsold property. 2015 will focus more on recovery and inventory
clearance. Mr. Deepak Kapoor, President CREDAI Western U.P. & Director, Gulshan Homz
said, As far as returns are concerned, 2014 was not the best of years. In the initial months, sales
were below expected and investors had dried the market thereby freezing the prices in key
regions. High inventories and low absorption rate indicate it will take time for things to pick up.
However, the final few months of 2014 and the first quarter of 2015 has shown positive result for
the realty sector. The government has played a vital role in creating a pool of sentiments for the
public which has started to show results. The only thing now remains to see are, how it delivers
the bigger promises made for this sector.
The work for better and efficient infrastructure came out with the government announcing the
initiative of developing 100 smart cities across the country thereby promoting urbanization and
smart & enhanced living for the public. Although, the plan is still in its early days with no
blueprints and layouts finalized apart from few names of the cities mentioned. The idea of
developing 100 integrated cities with the best technological advancements will change the face
of the country in the upcoming decades. The cabinet has given it a nod which sets the pace up for
this project. With an outlay plan of Rs. 48,000 crores, there will be a lot of FDI required in each
industry. Mr. Rajesh Goyal, MD, RG Group says The development of smart cities is a crucial
step for urbanization and development of the nation. With this move, a lot of FDI will be
attracted in the country which will help boost the investors market and the real estate sector will
have a huge scope for development in the upcoming few years. Smart cities will provide
customers with a lot of innovative offerings and a hi-tech city to cater to all the requirements of
the residents and users. Earlier this year, India and US had singed a MoU for the development of
3 smart cities namely; Allahabad, Ajmer and Vizag. With this decision, a major push for the plan
of 100 smart cities will finally get a start. Also, China and Japan has shown a keen interest in
developing more sister cities in India to push the plan of smart cities further. The two countries
have always invested in India in a big manner; and there recent decisions suggest greater help in
the development of smart cities.
The budget presented by Modi government had eased the rules regarding REITs. It seeks to
rationalize the capital gain regime for sponsors exiting at the time of listing subject to payment of
Securities Transaction Tax. The budget also proposed to convert gold into financial savings,
simplifying Real Estate Investment Trusts (REITs) and discouraged cash transitions. In addition
to this, rental incomes from assets directly held by the REITs is suggested to be taxed in the
hands of unit holders. REITs work like mutual funds and invest in property. The income from

these investments is distributed among unit holders. Mr. Rupesh Gupta, Director, JM Housing,
said; Indian realty market is a highly sentiment driven sector. The change in the government last
year had also changed the mind-set of the people with big promises made by the government for
the betterment of the country as a whole. However, the new policy has eased rules regarding
REITs; so we are expecting a huge impact in the coming few years once the technical glitches are
removed. It is believed that Real estate construction market is poised to grow by 20 per cent
between now and 2017, which will largely be due to growth of infrastructure, increase in FDI in
real estate, faster clearances of projects and other such hurdles which block the growth.
The Modi government has made necessary changes in FDI to bring in more investments. The
apex body had reduced minimum floor area required for foreign direct investment (FDI) in
projects from 50,000 square metres (sq. m) to 20,000 sq. m. It has also reduced the minimum
capital required from $10 million to $5 million, making more and more projects eligible for FDI.
All in all, to relax FDI rule it has also done away with the three-year lock-in period. Mr. Mahipal
Singh Raghav, CMD, MMR Group, said; Reduction in the minimum floor area required for
foreign direct investment in projects and also the condensed minimum capital required to $5
million will act as a catalyst for real estate growth over the next decade. Three-year lock-in
period for FDI has been removed in the fresh bill. This was one of the most positive steps taken
by the government for the development of infrastructure and further growth of the country during
its one year tenure. Apart from attracting FDI, there have been a series of crucial announcements
done to promote growth and development across the nation.
In order to boost affordable housing and make realty the dream of housing for all by 2022,
Modi government had kick started several measures and allocated Rs. 4,000 crore to the National
Housing Bank for increasing the flow of credit for affordable housing. Changes were also
notified in rules for this scheme to help buyers in purchasing homes. In the final quarter last year,
HUDA and DDA came out with its affordable housing schemes which created a ripple effect of
demand and provoked several private players across the country to come out with more
affordable projects, thereby helping the cause of low cost housing and meeting governments
target of housing for all. Mr. Ashok Gupta, CMD, Ajnara India Ltd. says, Shortage of affordable
housing was a huge catch by the Modi government and it had already included it in its manifesto
during elections. A lot of work has been planned and carried out for this aspect which can be a
major breakthrough in the coming years. To take support from private players, it will be
imperative that land prices are dropped, new parcels are released and basic infrastructure is
provided in all regions with growth plan. One year is still a pretty less time to judge a new
governments performance; but the ideas are ambitious and laid down very well for a good
development in coming times.
Modi government introduced the revised Real Estate Regulatory Bill which aimed at
systematic development and growth of real estate sector. It is meant to benefit everyone linked
up with real estate sector. Clearance of real estate bill will make ways for uniform governing
mechanism across the realty sector and will add to the credibility and reliability of countrys

unregulated real estate sector. Mr. Kushagr Ansal, Director, Ansal Housing, says; The election
of a stable government boosted investors sentiment. Also, the government announced steps to
bring relief to the sector. REITs became real, there was relaxation made in FDI and Real Estate
Regulation Bill has changed the entire geography of realty sector in the last one year. The new
government has brought a ray of hope for more growth and transparency for this sector.
Another important announcement made by Modi government within its maiden year of service
to the nation; where it recently came out with an aspiring plan for enhancing the infrastructure of
our country and to improve the connectivity of west to east land borders. A grand road is being
planned to be constructed by the name of Bharat Mala. The road network will stretch from
Gujarat in the west to Mizoram in the east and cover 10 major states. Mr. Vikas Bhasin, MD,
Saya Homes says Good connectivity and infrastructure is the backbone of real estate sector. It
has always been observed that regions with better connectivity and major roadways has
transformed into a much sorted destination where investors are later followed by residents. The
country in general will receive benefit from such plan and economic boost is assured. Speaking
about the governments record for the last one year; various plans had been made which are in
pipeline but much is till left. With time, we feel there is still a lot to come from this government.
Looking at a macro perspective, the initiative of Goods and Services tax (GST) by this
government will bring a much transparent picture to every transaction in the country and help in
avoiding the confusion of multiple taxes. The recently passed black money bill is again a great
achievement for this government which is determined to curb corruption and promote
transparency. Real estate sector is not an independent sector and thus, it relies heavily on its
allied industries to perform which includes; steel, cement, banking, manufacturing and other
such key industries. The Make In India plan is ready to boost the manufacturing and
infrastructure of the country which will directly benefit this sector. One of the very visible sights
that the country has been witnessing is the small trips that Narendra Modi has been making to
various countries, spreading the message of developing a new and better India has somewhere
persuaded global giants to invest in India. On the flipside, there has not been much progress on
the land bill since the time it was first approved by the previous government, and even after the
recent amendments made in the bill by the Modi government. Modis grand visions are directly
related to the success of this bill, which could be cleared by the joint committee in the upcoming
monsoon session. Also, there is still a lot of clarity needed for smart cities project, housing for all
by 2022 plan, real estate bill and other major projects.
Needless to mention that BJP led Modi government is trying to change the face of our country
by good ideation and strategies, one year of Modi governance has witnessed notable changes in
all the sectors, real estate being no exception, with few areas still left out. From following new
and innovative approaches for fast and better development of the nation to bringing fundamental
changes in paradigms of working, Modi government is leaving no stones unturned to get our
country enthroned as one of the best and the most developed nation across the globe.

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