Consumer protection haunting the Housing Sector Badly
Apr 2010:
There is a shortage of 25 million houses in India. This is worrisome. Those who buy houses have an emotional attachment to the asset and the real estate sector even today is dominated by unorganised players. Consumer protection in this context is key and it is an issue that is haunting the industry at present. The rate at which the number of consumer grievances is increasing in the country is indeed alarming. However, setting up of a regulator is not the solution to this problem.
Introducing a regulator in the real estate industry would mean going back to the license raj which India was subjected to several years ago. In today's day and age when the economy is moving northwards and the country is flaunting its liberalisation policy, why should one go back to the pre-1991 era where any expansion or development in a sector required prior approvals of the government. Besides, real estate as an industry is already over regulated with various rules and regulations which vary from state to state. Adding a regulator will only have a strangulating effect. Why should one have an inspector raj at this point in time?
Undoubtedly, there are problems relating to consumer grievances or there are bouts of buyer-builder showdown but those can be addressed with the help of a strong legal system. The country should have separate consumer courts dealing with problems pertaining to the real estate industry alone. If India can have a separate motor accidents compensation tribunal, for real estate, too, the government should take steps to set up a specialised real estate consumer court. After all, it is not a regulator but a court that gives justice.
The government must recognise the importance of real estate in the country. It contributes heavily to the GDP growth. It is also one of the biggest creators of jobs in the country and is still considered 'sunrise' and has a long way to go. This is the sector to be looked out for over the next 10 years and opportunities will be critical. Success in this industry is related to supply and the buzzword, affordable. What sectors such as automobile, aviation and telecom witnessed in the past decade following the 'affordable' mantra, real estate will witness the same in the next 10 years.
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