Will corona break the chain of corruption?
Let real estate make the right beginning and set the role model for the rest of the economy as over a hundred industries depend on this sector which also is supposed to contribute about 20% to the GDP if runs on full steam, writes B N KUMAR
Indira Gandhi said it’s a global phenomenon. Narendra Modi said Na Kaavoonga, Naa Khane Doonga. Arvind Kejriwal won elections on the strength of anti-corruption agitation.
But, the nation has not been able to solve or at least contain corruption. India ranks 80 among 180 countries in the Corruption Perception Index and it is not a great achievement to talk about since China, Benin, Ghana and Morocco and on a similar pedestal.
During the infamous Emergency (1975-77), it was believed that government staff thought twice before asking for ‘paper weights’ for doing regular work. Does this mean that dictatorship can solve corruption? Certainly not since India shares the CPI ranking with China.
As a journalist I used to hear that Octroi posts were rife with corruption. Once, I dared ask an octroi officer about corruption. His response was astounding: “Corruption? Where is it? It is like air. You can’t see it but you feel it if it hits you.” Today, top cops like Navi Mumbai police Commissioner Sanjay Kumar lamented: Corruption has become socially acceptable.
Octroi check posts and police checks could just be tip of an iceberg of corruption. Let me address one key sector, real estate, as a case study. The labour intensive real estate contributes handsomely to the GDP. This sector has been bashed left, right and centre for its contribution to corruption as well. The stories of politician-builder-Babu nexus, several builders not fulfilling their commitments and going bust and many realtors landing behind the bars still ring in our ears.
At the risk of sounding like a builders’ advocate, I must say many from this community have been at the receiving end. Builders became the favourite punching bag for many governments. The word builder became almost an abuse for the community and my friends at MCHI CREDAI started calling themselves as developers.
Developers admit in private that as much as 20% of the cost of a building goes (or went) into corruption. Developers needed at least 40 clearances involving 150 officials. The single window system did not make any difference as the giver and taker equally got habituated to corruption. It really became difficult to break the chain. The land cost was the largest component. Then we had the pre-GST era of multiple taxation.
Enough PR for builders? Well, let’s shift to the darker side of the moon.
Business Today once quoted Sunil Mantri, Chairman of Sunil Mantri Realty Ltd and President of Maharashtra Council of Housing Industry as saying: "Wealthy builders flaunting their opulence are a common sight at the bungalows and offices of politicians." The magazine went on to quote Mantri: "A lot of people have black money. Real estate is the best place to park such money in, and a lot of politicians, bureaucrats and some businessmen are doing so."
You may ask me as to whether our planners and governments were not aware of this? Why did they allow the situation to go from bad to worse? "There has been a lot of talk on this, but no action,” said then CFREDAI chairman Lalit Kumar Jain. “We too hate the system that labels us as crooks and breeders of black money. There is a need to realise that the various bottlenecks at government level at Centre and in several states are equally responsible for this menace," he said. In the same breath, Jain said ‘we will not entertain corrupt officials’. But nothing much seems to have happened after that.
Like what Mark Twain said about weather, everybody talks about corruption, nobody does anything about it. Some might jump to the conclusion that corruption in real estate seems to have ended with the onset of RERA and single window system of clearances. But the reality of realty is there are hardly any new projects. On the contrary, there have been a whole lot of projects launched but held up and real estate services company Anarock estimates that there could be 15.62 lakh affordable housing units under construction across the country.
One general defence for developers has been that these people come from the same society as anyone else. You have corrupt politicians, corrupt police, corrupt government officials and corrupt builders.
Having said all this, it is time we looked at corruption much more seriously than ever before because the entire industry, business and the nation as a whole has been crippled by corona virus. The devastating effect is felt by one and all – the taker as well the giver. Corruption, unlike corona virus, may not have claimed lives but it has certainly dealt a deadly blow to the economy.
Can we begin life on a new, clean slate and make the wheels of the economy run fast without clogging them with corruption?
We could begin by taking take some steps like removing the bottlenecks that give rise to corruption. The RERA must take into account delays by the officialdom in clearing proposals and make them accountable. We love to have time-bound projects. We must have time-framed project approval system. All project proposals and their status should be posted on RERA websites and delays in clearances should be notified publicly so that the buyer and seller could have a clear communication between them. Remember, transparency, like communication, should be two-way.
The cost of inputs such as land, construction material, taxation should all be made affordable for the builder to make his units affordable for the buyer. The reverse repo-rate benefit must be passed onto the end consumer to make the RBI policies beneficial for all. It is doable. Let real estate make the right beginning and set the role model for the rest of the economy as over a hundred industries depend on this sector which also is supposed to contribute about 20% to the GDP if runs on full steam.
Let us sincerely hope that corona will break the chain of corruption and all stake holders will maintain physical distance from illicit income.