CREDAI NCR BLOG

India with a billion plus population and an expanding consumer class is looking forward to the second ‘Green Revolution’. Both industry and government are upbeat about agriculture and agro-processing, touted to be the next big thing happening in India’s corporate fields. Textile sector has been one of the key strengths of the Indian economy, reflected by the booming exports of textiles and garments in the post-quota regime. The ‘aam aadmi’ of the country has always sought for fulfilment of three basic necessities: Food, Clothing and Housing. What about housing then? An Asian Development Bank (ADB) estimate show that some 10 million housing units will be required by 2030 in India. FDI (Equity) inflows into the Indian real estate and housing market picked up significantly from Rs 171 Crores in 2005-06 to Rs 2,121 Crores in 2006-07. The real estate sector saw concrete economic liberalisation only since 2005, with the relaxation of FDI Norms in the residential/township construction sector. The growth story in this sector has been largely driven by the IT & ITES sectors, though this sector is seeing some slowdown due to worldwide recession, particularly in the US market. Shortage of quality manpower and rising wage bills are other issues hurting developers’ bottomline. Yet this sector is the second largest employment provider in the Indian economy after agriculture, which employs more than two-thirds of the workable population of the country. Despite global recession, the Indian economy will be propelled by increasing consumption demand and higher foreign investments coming into the economy. ‘Where do we go from here?’ It is about time for government to take a relook into the issue of awarding industry status to this sector. Considering ‘Inclusive Growth’ as the main agenda of the policy makers in India in the current times, this sector should get a boost in terms of further opening up to foreign capital. An independent regulatory authority for this sector may be considered seriously. Apart from the social implications of providing housing to the masses, this sector employs mostly people from the unorganised sector. An independent regulatory body would not only streamline the functioning procedures of this sector, but will also create positive terms-of-trade effect in the economy, thereby ensuring higher employment for the unorganised sector workers. Thus, a compelling reason exists for policy makers to focus attention and channelise efforts towards this sector and in the process contributing meaningfully to the cause of sustainable economic development in India.