A solid Infrastructure base is necessary for a country’s rapid development. For a leap in a country’s GDP Infrastructure development plays a vital role. Real estate sector, being a major ingredient of Infrastructure base of country caters the residential and commercial needs of a country.
Real estate sector contributes around 7% to GDP of India. India’s growing Infrastructural needs are subjected to rise in retail, hospitality and commercial subsectors. After the introduction of business reforms in India, urbanization coupled with easy financing option brought a boom in the sector and real estate sector surged ahead at an astronomical pace with NCR Mumbai and Bangalore, being the cities who led the real estate revolution in the country. Large scale activities hit the sector and many new players joined the league.
Resultant, the supply factor increased sharply in context to demand factor of the sector. There was an oversupply situation in most of the cities which created a glut-like situation. This situation created a platform for Government’s attention and intervention to revive the sector and to create a regulatory authority through Real Estate Regulation and Development bill. The introduction of Real Estate Investment Trust (REIT), changes in SEZ policy, easing of external commercial borrowing norms and enhancement of limits for listed NCD’s are other positive steps taken by the government for the benefit of Real estate sectors. There were changes in context to Real estate sector made in Companies Act 2013, some of which implicating the sector are:
- Depreciation
- Consolidated Financial Statement (CFS)
- Dividend
- Financial statements authentication and board’s report Corporate Social Responsibility (CSR)
- Restriction on noncash transactions involving directors
- Loans and Investments by the company
- Mergers and acquisitions
- Audit Committee, Nomination and Remuneration Committee.
- Establishment of Serious Fraud Investigation office (SFIO)
The Industry estimates are that the Indian real estate market in FY 17 may grow to approximately US $ 140 billion. This will be possible if the government eases the FDI norms for the sector which include 100% FDI in Multi Brand Retail Sector too.
The Real estate Regulation and Development Bill after gaining the assent of both houses of Parliament will soon become an Act. The present government’s initiative to boost the infrastructure sector and serious contemplation of the authorities to look into the just demands of the sector will certainly bring back the golden days for the sector in future.