Corruption dents affordability of Indian houses

10:55, June 25, 2011      

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Rampant corruption hurts the affordability of Indian houses, said industry insiders Friday.

"Corruption in India is beyond imagination. If we don't remove corruption affordable house is a lie," said Niranjan Hiranandani, managing director with property developer Hiranandani Group of Companies.

Hiranandani stressed investment in property always has good return but enormous need of housing hasn't been met in India.

The difficulties in land acquisition and lack of supporting infrastructure plague the real estate industry, according to Hiranandani.

The development of real estate often involves bribe taking in order to avoid delays and obtain necessary permits.

The corruption hence causes increase of developers' cost and uncertainties to development projects, hurting the customers in the end.

Nearly 19 percent of Indian households at the bottom of the income pyramid can't afford any type of housing through their income and another 44.6 percent of households in lower middle income group can't afford a house in tier-I and tier-II cities, said a report by Indian industry lobbying body Conference of Indian Industry (CII) and real estate services firm Jones Lang LaSalle unveiled Friday.

Indian government and some property developers have long been talking about affordable or low-cost houses but with few such projects in place.

To improve the affordability of houses, there should be less delay of projects through removing corruption and improving governmental efficiency, said Madhur Bajaj, vice chairman of Indian motorbike maker Bajaj Auto Limited.

Brotin Banerjee, CEO with Tata Housing Development Co. Ltd., suggested the introduction of advanced technologies and lower cost of land to make more people afford their own houses.

Efforts should be made to rationalize tax rates to drive down prices and slash corruption to reduce time lag of project execution, said Lalit Kumar Jain, president of Confederation of Real Estate Developers Association of India.

It's estimated that around 93 million people will live in slum areas by 2011 with more than half population staying in slums in Indian business and financial center Mumbai.

In 2010, India was ranked 87th out of the 178 countries in Corruption Perceptions Index by Transparency International.

Source: Xinhua
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