Blame red tape for black money

S. SHANKER

Innumerable approvals are breeding grounds for corruption.

Developers in Mumbai say single-window clearance could reduce apartment costs by a quarter.

Probably the first signs of introspection among them, developers saddled with high inventories and shrinking sales over the last 18 months called for reforms to end ‘licence raj.'

Developers have joined the crusade against black money and corruption and said the cost of apartments sold in Mumbai could easily be lower by 25 per cent. For this to happen, a single-window clearance needs to be put in place, instead of the 49 departments and over 150 persons that give approvals at present.

“Any delay at any stage obviously gives rise to greasing of palms as developers are anxious to complete their project,” said Mr Lalit Kumar Jain, National President, Confederation of Real Estate Developers' Association of India.

COST OF APPROVAL

A Mumbai developer said on average he pays Rs 3 crore a year for project approvals.

The Maharashtra Chamber of Housing Industry has over 1,000 members involved in developing projects worth over Rs 1 lakh crore in the city and its suburbs.

Mr Jain said that a McKinsey report to the Government of India on the cost of approval pointed out that the cost could constitute up to 40 per cent of the sale value.

Excessive regulation is the prime cause of project delays and innumerable approval/sanctions are fertile breeding grounds for corruption and black money transactions, he said.