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This is a summary of HDFC chairman Deepak S Parekh’s statement from the company’s 33rd annual report where he touched upon various aspects related to crucial issues in the real-estate segment
In HDFC's 33rd annual report, Deepak Parekh highlighted a few key issues related to the real-estate segment. According to him, the urban infrastructure deficit is apparent in every aspect, but more so in transport networks and affordable housing, both of which need vast financial resources.
He said that the budgetary allocations for urban infrastructure are minuscule and hence the sector needs private funding on a large scale. Indian cities need to be empowered to mobilise their own resources. This would enable them to reduce their reliance on the States and the Centre, whose finances are already constrained.
Mr Parekh pointed out that many cities around the world have the power to levy their own taxes and raise money directly from the markets. With these powers comes accountability to citizenry.
He emphasised that the country needs a thorough urban cleansing-which starts with the need for a change in the mindset. Citizens have to be passionate about the cities they live in. China is the most significant example of city transformation in recent times.
According to him, urban growth can be driven through radical changes in land-acquisition policies, improved governance and inculcating skills and innovative capabilities in people. Indians tend to be trapped in a policy paralysis as far as land reforms are concerned. While countries like Singapore, Malaysia and Hong Kong have effectively reclaimed land where often the onus of reclamation rests with private developers, a city like Mumbai has no reason to get cold feet on reclaiming land as long as environmental considerations are taken care of, he said.
He cited the example of the Urban Land (Ceiling & Regulation) Act which was repealed by the Centre over a decade ago. In Maharashtra, ULCRA was repealed three years ago, but cases related to land disputes filed under this Act are still pending in courts. These cases should have been withdrawn immediately after the repeal of the Act, he said.
On the vision for the future, Mr Parekh said that no Indian city today has a 20-year visionary transportation plan. Significant changes in the Indian urban landscape can only become a reality if there is a strong will to simplify, streamline and de-politicise the process of land acquisition. India needs to work quickly on creating at least two dozen satellite cities around Tier I and Tier II cities, he said.
According to him, the need of the hour is to have directly-elected city managers who can function as the chief executive officer of the city. The city CEO has to have a predefined tenure and targets and must be empowered. To gain competitive advantage, India needs to swiftly develop leading positions in many more new niche areas which will help add value over the longer term.
Dwelling further on this subject, Mr Parekh said that developing master plans has to be a core function. India needs to look at examples of cities that have imbibed a culture of sustainable urban planning. Effective urban planning facilitates the creation of infrastructure ahead of demand and helps to devise innovative 'future-ready solutions'. Singapore for example, is investing ahead to intensify land use through the development of underground space. It is putting in place subterranean land rights with a valuation framework and developing an underground master plan, which will add to the overall land bank, he said.
Speaking on realty prices, he said that for a short spell of time, real-estate prices had corrected to realistic levels, giving many the hope of becoming homeowners.
However, as soon as economic conditions improved, residential prices in many pockets of the country increased sharply once again. Mr Parekh asked a straight question-how can one envisage building globally competitive cities when progressively a larger segment of society keeps getting priced out of the housing market?
The government, through the Rajiv Awas Yojana, is allocating funds to encourage States to move towards slum-free cities. This needs a long-term commitment of at least 20 years, but is a laudable initiative, he said.Plans to establish a dedicated debt fund to provide long-term resources for infrastructure projects set up through public-private partnerships is another positive step. Mr Parekh said. This year, Delhi is expected to be the first to put in place a real-estate regulator which will protect homebuyers from fly-by-night developers and instances of fraud, he said.