Institutionalize a code of conduct & self regulation mechanism to curb unethical practices: VP tells Real Estate Industry

India - Government Updates
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The Vice President of India, Shri M. Venkaiah Naidu has called upon the industry bodies in the Real Estate Sector to institutionalize a code conduct and a self regulation mechanism to curb unethical practices.

Addressing the young entrepreneurs and professionals at the 3rd YouthCon organized by CREDAI, here today, he pointed out that the sector had come under severe scrutiny by the apex court and statutory Consumer rights bodies due to some unethical practices followed by certain players.

Shri Naidu said that the growing NPA in real estate had not only affected Banks but also dried up Bank loans to the sector from 63% in 2013 to 17% in 2016, thereby accentuating the stress. “You owe as much to your customers and the workers as you do to creditors and suppliers. More than financial viability, it is social obligation and trust that is at stake”, he said.

Quoting the recent report of CAG on Real Estate sector, the Vice President said that 95% of the real estate developers, builders and agents did not have mandatory PAN. He also pointed to surveys from the sources like CREDAI and RERA and said that out of around 3000 entities surveyed; more than 500 didn’t file Income Tax Returns.

Saying that the CAG Report must be the point of reference, Shri Naidu wanted the industry to promote digital transactions and enhance transparency and ethical facet of the sector.

Considering that the Real Estate sector contributes 7.9% to the GDP of the country and provides employment to more than 50 million people, he said that a transparent and predictable regulatory regime was essential to strengthen the real estate market by creating greater confidence in the consumers.

Shri Naidu said that the sector was essential for healthy, inclusive and equitable growth of the economy.

The Vice President added that programmes like AMRUT, HRIDAY and the pioneering initiatives like 100 Smart Cities, Housing for all by 2022 and PMAY present a great opportunity for the sector. He wanted organisations like the CREDAI to take lead in imparting the skill-sets required for new employment opportunities.

Shri Naidu said that it was heartening to note that the Real Estate sector was showing signs of revival due to measures like RERA and GST.

Pointing that the Supreme Court has acknowledged Right to Shelter as a Fundamental Right, he said “we have a massive task at hand” He said there was a shortage of 19 million housing units in India and 96 per cent of those affected by this shortage were people belonging to Economically Weaker Sections and Middle Income Groups.

The Vice President stressed upon the need to create affordable and adequate shelter in urban habitats to the increasing influx of population that is moving out of villages to explore better opportunities.

 

Following is the text of Vice President’s address:

I am happy to join youon the 3rd YouthCon of the CREDAI and share my thoughts and expectations with the young entrepreneurs in the real estate sector.

 

Young Friends,

India is poised to assume its rightful place in global economy.

Organizations like World Bank and IMF have recognized India’s growth story. As World Bank has acknowledged “India’s growth performance has been quite impressive. Year after Year it has delivered strong numbers around its potential growth”.

With around 7.3% Growth Rate, India is the fastest growing economy today. We are the sixth largest economy of the world. Over last five years our Ease of Doing Business rankings have improved our ranking from 142 in  2014  to 77 this year and the biggest gain was in construction permits where India climbed 129 ranks to 52nd place.

Domestically, we have created an enabling policy environment and legislative architecture to promote enterprise and innovations. The Prime Minister has given a clarion call to “Reform, Perform and Transform”.  Every sector in our economy is being radically transformed.  For example, GST has been the biggest tax reform anywhere in the world. There has been unprecedented expansion of tax base and tax compliance. There is a rise of 50% in tax base and an increase of 80% in the filing of Income Tax Returns. Financial inclusion is becoming a reality.

We are a young and aspirational India. To give opportunity to young entrepreneurs, the Government has launched schemes like Start Up India under which 15000 new entrepreneurs have been recognized as Start Ups. For small entrepreneurs, 15 crore loans have been sanctioned under the MUDRA Yojna, majority of them being women and persons from weaker sections. With 65% of our population under 35 years, India can potentially draw upon this demographic dividend to build a New India in the next few years. The young leaders like you must lead their respective sectors to this dream.   

 

युवा साथियों,

 

भारत विश्व अर्थव्यवस्था में अपनी अपेक्षित सही जगह लेने के लिये तैयार है। विश्व बैंक और IMF जैसी संस्थाओं ने भी भारत की विकास गाथा को स्वीकार किया है। विश्व बैंक ने माना कि भारत की विकास गाथा प्रशंसनीय रही है। उसने साल दर साल विकास के जबरदस्त आंकड़े प्रस्तुत किये है।

7.3% विकास दर के साथ, आज भारत विश्व की सबसे तेज बढ़ने वाली अर्थव्यवस्था है। हम विश्व की छठी सबसे बड़ी अर्थव्यवस्था हैं।  पिछले पांच सालों में Ease of Doing Business  तालिका में हमारा स्थान 150 से बढ़कर 77 तक पहुँच गया है। हम विश्व की पहली 50 अर्थव्यवस्थाओं में पहुंचने का प्रयास कर रहे हैं।

देश के भीतर हमने, नये उद्यमों और नवोन्वेषण को प्रोत्साहित करने के लिये कारगर नीतियां और कानूनी ढांचा तैयार किया है। प्रधानमंत्री ने रिफार्म, परफार्म तथा ट्रांसफार्म का नया मंत्र दिया है। अर्थव्यवस्था के हर क्षेत्र में आमूलचूल क्रांतिकारी बदलाव हो रहे हैं। GST  को लागू किया जाना, विश्व का सबसे बड़ा कर सुधार था। इसकी वजह से टैक्स बेस तथा राजस्व में वृद्धि हुई है। GST के बाद टैक्स बेस में 50% की वृद्धि हुई है। इसी प्रकार आयकर रिटर्न भरने वालों की संख्या में 80% की वृद्धि हुई है। हम एक टैक्स पालन करने वाले राष्ट्र बन रहे हैं।

हम एक युवा और आकांक्षी देश हैं। युवा उद्यमियों को प्रोत्साहन देने के लिये सरकार की स्टार्ट अप योजना के तहत 15000 नये उद्यमियों को चिन्हित किया गया। छोटे उद्यमियों के लिये मुद्रा योजना के तहत 15 करोड़ ऋण दिये गये जिनमें अधिकांश महिलाएं या दुर्बल वर्ग के लाभार्थी हैं। हमारी जनसंख्या का 65% भाग 35 वर्ष से कम आयु का है। अगले तीन वर्षो में न्यू इंडिया बनाने के लिये हम इस डेमोग्राफिक डिवेडेंट का भरपूर प्रयोग करना चाहते है।  आप जैसे युवा इस स्वप्न को प्राप्त करने के लिये अपने-अपने क्षेत्र का नेतृत्व करें।

The Real Estate sector is an important sector of our economy that contributes 7.9% to the GDP of the country.  Being the second largest job provider in the economy after agriculture, the entire country has stakes in the real estate sector. Of more than 50 million people employed in the construction sector, 90% are minimally skilled and 9% are skilled workers. This figure is likely to rise up to 67 million by 2022.This sector is essential for healthy, inclusive and equitable growth of the economy.

However, in the recent times, the Real estate sector has come under severe scrutiny by apex court and statutory Consumer rights bodies, due to some unethical practices followed by certain players. As I told you it is an important sector of our economy and we cannot allow it to fail. We should take corrective action and industry bodies like yours should institutionalize an internal self-regulation mechanism.  The growing NPA in real estate has not only affected banks but also dried up bank loans to the sector from 63% in 2013 to 17% in 2016, thereby accentuating the stress.

You owe as much to your customers and the workers as you do to creditors and suppliers. More than financial viability, it is social obligation and trust that is at stake.

To promote real estate sector, ambitious urban renewal programmes like AMRUT, HRIDAY and the pioneering initiatives like 100 Smart Cities, Housing for All by 2022 and PMAY have been launched. These programmes require a massive pool of skilled personnel. It is a great opportunity for your organization for imparting the skill-sets required for these new employment opportunities. 

The Government has laid emphasis on affordable housing and has accordingly provided a conducive policy environment and incentives.

In the recent budget, the Government has provided tax relief on the notional income from unsold or self occupied houses, by lowering GST on affordable Houses.

A transparent and predictable regulatory regime is essential to strengthen the real estate market by creating greater confidence in the consumers.

With measures like RERA and GSTthe realty sector is showing signs of revival.

However, I am aware that certain difficulties in the registration of properties still exist. That has been a drag on our Ease of Doing Business ranking for years. I call upon the Central and State Governments to resolve these difficulties to facilitate a steady growth in real estate sector.

 

Friends,

 

The Supreme Court has acknowledged Right to Shelter as a Fundamental Right included in Right to Life under Article 21 of our Constitution.

As such, we have a massive task at hand. Our cities will remain the engines of rapid economic growth.  People are migrating to cities to explore better opportunities. Our urban habitats have to provide adequate shelter to ever increasing influx of population. As per one estimate, there is a shortage of 19 million housing units in India, 96 per cent of those affected by this shortage are people belonging to Economically Weaker Sections and Middle Income Groups.

 

Friends,

 

Any sector survives and thrives with the innovative enterprise of its new Members. The Government is actively promoting innovation and enterprise in every sector of the economy. There is vast scope of innovative partnerships in Real Estate sector too.

I am happy to learn that CREDAI, as part of their CSR, have been training about 1 lakh construction workers. I would suggest that you should provide certification to construction workers after providing them 12-80 hours of orientation and bridge course under Recognition of Prior Learning Scheme. It will greatly help unorganized construction workers in upgrading their skills and improve their job prospects.

This year, the Government has proposed a pension scheme for those employed in unorganized sector. It is indeed a welcome initiative. Being one of the larger sectors employing unorganized workers, I think you should promote and propagate this scheme but also to actively persuade your Members to sensitize and enroll construction workers in the Scheme.

Similarly, very often the benefits of Welfare Cess collected under Building and other Construction Workers’ Welfare Cess Act are not delivered to the construction workers. By one estimate, more than Rs 45000 crores have been collected by the State Governments, of which only 35% could be utilized for the welfare of workers. I hope the State Governments and CREDAI will work together to ensure timely and adequate delivery of intended benefits to the construction workers.

 

Friends,

 

In your sector, unorganized minimally skilled illiterate construction workers are important stakeholders.  I will urge you to explore the possibility of setting up a separate wing in CREDAI for the welfare of construction and building workers. It will help promote and monitor the implementation of statutory obligations towards welfare of these workers.

As young professionals, you all would be aware of innovations being made in the designs and materials to make buildings energy efficient and environmentally sustainable. An elaborate Energy efficiency code has been prescribed. Apex bodies like CREDAI should adopt these Codes.

Similarly, Water preservation and solid waste treatment, should be an essential feature in the Housing projects. I urge you to incorporate energy efficiency and renewable energy measures in affordable housing projects. These measures will ensure long term savings on power and water bills for the residents.

I have learnt that CREDAI under its CSR activities had launched Clean City Movement, which was not only about solid waste management but also provided employment opportunities to workers from economically weaker sections. I admire your initiative and appeal to you to expand it by joining hands with the local municipal authorities where your projects are located.

You will be doing a great service to the society if could provide technological solutions to remove the unlawful practice of manual scavenging, manual sewer cleaning. These practices are a blot and disgrace to any civilized society and must be removed immediately.

I will also expect you to adopt and adhere to best building construction practices. We all are aware that construction has emerged as major contributor to air pollution in the cities like Delhi.

 

Young Friends,

 

You constitute the rich human capital of our country. Your talent is the biggest asset of the country. Your aspirations and competence drive the country’s growth process. I would urge you to hone your skills, upgrade them and keep learning from the best practices around the world.

The real estate sector has often been blamed for absorbing enormous amount of unaccounted cash. The recent report of CAG on Real Estate sector should be an eye-opener for policy makers as well as the Industry. 95% of the real estate developers, builders and agents don’t have mandatory PAN. A sample survey from the sources like CREDAI and RERA suggested that out of around 3000 entities surveyed, more than 500 didn’t file Income Tax Returns. As young entrepreneurs and professionals of an apex industry organization, I request you to promote digital transactions and enhance transparency and ethical facet of your sector.

 

Young Friends,

 

Let me remind you the seven social sins Mahatma Gandhi elaborated in his weekly news paper Young India on 22nd October, 1925:

 

  • Politics without principles.
  • Wealth without work.
  • Pleasure without conscience.
  • Knowledge without character.
  • Commerce without morality.
  • Science without humanity.
  • Worship without sacrifice

 

Knowledge without character and Commerce without morality are sins. As young professionals I beseech you, to keep these principles in mind. Today when India is emerging as sixth largest economy in the world, when we are become one of the most sought after destination for FDI, we must ensure that our growth must be built on strong ethical foundations.

We cannot allow unscrupulous elements to defame our country and derail our growth process. I urge each one of you to maintain a fine balance between profits and ethics.

 

मित्रों,

 

मैं आशा करूंगा कि आप सभी युवा उद्यमी, गांधी जी के मंत्र को याद रखेगें। हमें सुनिश्चित करना होगा कि हमारी प्रगति, नैतिकता के सुदृढ़ आधार पर खड़ी हो। हम चंद अनैतिक तत्वों को अपने देश का नाम बदनाम नहीं करने दे सकते और नहीं ही हम उन्हें अपने विकास के मार्ग में आने देगें। मुझे विश्वास है कि आप सभी लाभ और नैतिकता के बीच संतुलन बना कर अपने भविष्य में आगे प्रगति करेगें।

I am sure such YouthCon will help young entrepreneurs of the Sector to pool their expertise and entrepreneurship, to provide solutions to some of the issues and concerns.  It is essential that our real estate and construction sector is not only financially vibrant but also socially and environmentally responsible. 

I wish you all every success in your future endeavours and wish you a gratifying professional career ahead.

 

Jai Hind!

***

AKT/BK/MS/RK

 

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