- Infrastructure investment plunges, HDFC's Deepak Parekh eyes new govt for growthCBI wrong, C. B. Bhave is a person of high integrity: Deepak ParekhDon't create fear-psychosis for public officers: Deepak ParekhIPL-7: HDFC chairman Deepak Parekh appointed special advisor to interim BCCI chief Sunil Gavaskar
With housing projects facing huge delays and cost over-runs, top industry leader Deepak Parekh has suggested an online single-window clearance system, which can also tackle the menace of 'speed money' associated with multiplicity of approvals in this sector.
Parekh, Chairman of housing finance major HDFC, said that various approvals for housing projects take as long as 18-24 months, particularly in some big cities, and the construction gets delayed even if developers wish to do it immediately.
"Meanwhile, the developer needs to service the loan taken for acquiring the land, without receiving corresponding cash flows. Further, because of the multiplicity of approvals, speed money is demanded, often at every stage of approval. The end result is that all these time and cost overruns are eventually borne by the home buyer," he said.
Delays in approvals from various regulatory and administrative authorities have been a major issue plaguing the real estate sector and the industry players have been asking the government for a long time to streamline these processes.
Real estate industry body CREDAI Chairman Lalit Jain said that "about 40-48 approvals, depending on the city, are required to start a project and these clearances take nearly three years on an average".
"The cost of a project goes up by 40 per cent in metros and by 25 per cent in non-metros because of such delays, as appreciation in land costs, as also the cost of corruption, add to the overall cost of the project," he said.
The CREDAI Chairman further said that home prices can be cut down by 20-30 per cent if the approval time is reduced to 30 days, "which is entirely possible".
Parekh said: "The solution to these issues lies in putting in place an on-line, single window clearance mechanism for affordable housing projects."
Stressing on the need to make housing more affordable for Indians, he said in his annual letter to shareholders of HDFC that "my back-of-the-envelope estimation is that transparency and timely approvals can reduce costs for the end consumer by almost 20 per cent".
While expressing hope that the new government would work for one of the foremost aspirations of Indians -- being a homeowner, Parekh said land is a state subject, but a directive from the Centre to ensure that all states move towards e-governance would go a long way.
"These are only administrative related issues. There is no need for legislative changes, so implementation is easily doable. A few states have already