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The impact that the COVID-19 pandemic is leaving on different sectors has brought about the need for urgent reforms. The real estate sector, being a key component of the Indian economy, is not an exemption either. The industry has suffered greatly during the lockdown, with cash flows becoming restricted to a large degree. At a time like this, not introducing necessary reforms may cause significant damage to the real estate sector. The government too, has reflected that the activities in the realty sector cannot be stalled forever and need to be resumed.
Apart from constituting a significant part of India’s GDP, the realty sector also plays a multiplier role in the economy. A number of industries are directly related to it and the stopping of construction activities is causing a chain reaction. Moreover, the real estate sector employs about 12% of India’s total workforce. A large part of this 12% are daily wagers at construction sites and the lockdown has caused them to become unemployed. Another problem that has become quite prominent is that migrant workers are unable to return home. Thus, the lockdown is not only affecting the real estate sector at an industrial level, but also at household levels, lowering the morale of the workforce. All these have brought about the need for reforms.
Reforms that would attract people to buy properties are the ones that are most required right now. These include lowering the stamp duty, registration fees and other similar charges to bring down the costs. The government is already considering reducing the GST in the real estate sector. Simplifying the formalities would also be a major help. Instead of having to go through multiple processes and acquire so many approvals, if the buyers could make a single window for purchase it would be a major advantage. While that system is difficult to implement, it would surely be beneficial as it would save a lot of time. Moreover, at a time where social distancing is encouraged, minimizing presence for government approvals would help to avoid much of the human interaction. A number of changes are in talks and are expected to be rolled out soon.
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