Election campaigns delaying residential projects delivery
With just a few days left to go for the Indian elections, all the contenders in the race are trying their best to come to the power. After the blame-game, political leaders are on their feet for the election campaigns. Amidst several fake promises, now roads are being laid in far flunged villages, water facilities are being extended and several other upgrades are seeing the light of the day. However, one important aspect that is being completely ignored is the completion of the residential projects. And once again, despite investing a lion’s share of the savings, it is the aam aadmi bearing the brunt.
A recent report by JLL India, property consultants, revealed that over 25 per cent housing projects are facing delays due to several reasons. Till now, tedious approval process was lamented as the main reason for the delay. But with elections doing round the corner, another unfortunate reason has come into light.
Yes. In order to get favours later on, developers are funding various political parties. As per the list released by Association of Domestic Reforms (ADR), a Delhi-based NGO, ruling congress has earned Rs 2,008 crore between 2004 and 2011, followed by BJP, which earned Rs 994 crore. Even with the list out, the answer to who fund political parties still remain shrouded in the mystery. Though the corporate sector tops the ladder in ‘charity with strings’, real estate companies are not far behind in the league.
The report from the ADR also highlighted that during 2004-05 and 2011-12, about one-sixth of political donations came from real estate, oil and power firms. Just to throw a number, real estate is the second highest donor with total of 340 donations worth Rs 24.1 crore.
Thus, the money which should have been ideally channelised for the completion of already delayed projects is now being used up for election campaigns. As Santhosh Kumar, CEO, Operations, JLL India told Reuters, “a lot of money will flow from real estate into the elections, much of it unaccounted for. “They (developers) have to fund political candidates to facilitate future opportunities. Whoever comes into power, they have to maintain a relationship.” So, how will the developers benefit if the political party they supported come into power? Well, the only possible favour seems to be in terms of land acquisition.
When the sector is already going through a rough phase, are such donations really necessary? And most importantly is it healthy for the sector as such? Well, not really. Reiterating the same, Arun Gupta, CEO of Propertree Real Estate Services says, “any funding for business need is not healthy for any sector as it increases the expenses which adds up to cost and might result in increased cost of the project.” Also, the payoffs later is an unforeseen business deal, which again may or may not take off. Thus, in such cases, both the parties will be wrong.
What benefits real estate sector gets post-election will only come into light after 16 May, 2014. Till then, we can just wait and watch with our bucket list for the sector!
