Latest Real Estate News Delhi, India - Real Estate market in india

Share This Post

RM Reports

Single-Window Clearance: Still a Distant Dream

housing-project-Single Window Clearance

Santosh Sinha/RealtyMythshousing-project-Single Window Clearance

The Union Government cannot implement Single Window Clearance as most of the approvals come under state government’s purview. It, therefore, becomes mandatory to pass the real Estate Regulatory Bill which has provision like RERA which can easily take care of such nuances.

The real estate sector in India has been reeling under tremendous pressure since last 6-8 quarters. The burden of unsold inventories has broken their entire internal accrual system of cash flow. The result is that they are now forced to seek loans from the open market which they find very difficult to service. The cost is thus, passed on to the consumers. This creates a vicious circle; buyers hesitate to make decisions due to increased price which again adds to the stock of unsold inventories. In the given scenario, it appears difficult for the sector to come out alive and therefore, the developers look ambitiously towards the government for help. Rightly so, as one step by the government can make a huge difference to the otherwise, slowdown, circumstances. Yes, the sector is pleading to implement Single-Window Clearance System. Unfortunately, Union Budget 2016 disappointed again.

There are altogether 50 critical approvals required to be taken by a developer before the commencement of construction of any project. Time to grant these approvals vary from 15 days to 180 days. As per the Mckinsey Report – 2010: India’s Urban Awakening submitted to Government of India, the complete project approvals cost 40 percent of the overall sale value. In special circumstances, the time frame for granting approvals exceeds to even larger period. Unfortunately in some regions like Delhi NCR, every second project qualifies for special circumstances. Developers argue that if the approval mechanism could be streamlined, it would save a lot of funds. This would ultimately reflect on the final price of a project and could motivate home buyers who have gone into ‘fence-sitting’ mode.

Single-Window Clearance is being demanded since long. Developers have been asking to streamline the approval procedure for not less than 8-10 years. Industry experts have been advocating for such a mechanism. Many national and international consultancies have also outlined its benefits in length and breadth on various occasions. Still, it could not come out of the wish-list and test the on-ground realities. Why governments have failed to address this demand or are there any catch in it!

The land is one of the major raw materials to the real estate sector and it comes under the purview of State Governments. India has a federal government system where power is divided between one central government and other smaller state level governments. The central government has its own set of powers and cannot supersede powers of its state government and vice versa. Given this system in place, it, therefore, becomes difficult for one government to draft a rule applicable to all the regions in India. It can only streamline those approvals which come under its purview. Out of 50 critical approvals required, broadly there are only 5 approvals that come under central government’s jurisdiction. All other approvals have to be acquired from local authorities which come under state government’s purview. A developer can seek only following approvals from Central Authorities:

Sl. No.

Type of Approval

Approving Authority

Tentative Time Period

1.       

Ancient Monument distance Clearance (if required) before building plan approval

Archeological Survey of India

6 months

2.       

Road Access Clearance before building plan approval

NHAI/PWD

4-6 months

3.       

AAI Height NOC (before building plan approval)

Civil Aviation Deptt.

3-5 months

4.       

Environment Clearance (for 125 acres project with built up area above 20,000 sq. metres)

Ministry of Environment

12-18 months

5.       

Borewell Registration Certificate

Central Groundwater Authority

6 months

 

The Single Window Clearance has thus, remained a distant dream for the developers and the consumers at large. However, not everything is lost forever. The Union Government can still do something that can bring cheer to the sector. Here are some of the options the government can look forward in days to come.

Bring ‘centrally-controlled’ approvals under one roof:

Generally, a developer has to run pillar to post to get these approvals. Every ministry takes its own sweet time. Instead, the central government can create a single department where a developer needs to submit all its relevant documents. The authorized dignitaries will then vet them and pass its decision within stipulated time frame.

Direct respective state governments to formulate ‘Single-Window’ to fast-track approvals

The central Government can pass a bill directing respective state governments to formulate a mechanism to sanction required approvals in a predefined time frame. They may create a board or a separate department where a developer needs to visit once, submit all his documents and can expect approval / rejection within the given time period.

Thankfully, the Real Estate Regulatory Bill has all these provisions in place. It talks about the formation of Real Estate Regulatory Authority (RERA) which would be responsible for sanctions / rejections of approvals in a defined time. The proposed bill will also deal with ‘pre-launched’ projects and the budget spent on marketing of such projects.

The demand for creation of ‘Single Window’ to fast-track approval procedures could not meet its desired fate in this year’s budget as well. However, there are a lot more provisions the government can bring in to streamline, not only the approvals but the entire realty sector. It is now on the government how it wants to move ahead. Real estate requires huge support from the government and the proposed Regulatory Bill is a potential medicine to all its problems. It is now up to the government when it wants to prescribe the medicine!

Share This Post

Leave a Reply

Please wait...

Subscribe to our newsletter

Want to be notified when our article is published? Enter your email address and name below to be the first to know.