Demonetisation leads to business loss in Bihar
Real estate business has been in the doldrums in Patna or, for that matter, Bihar with the state suffering from policy paralysis of sorts from 2012 to 2015. Demonetisation followed by the Real Estate Regulation Act (RERA) and the Goods and Services Tax (GST) has only added to the miseries of realtors.
The overall demand plunged after the demonetisation, which did not pick up even during Diwali, say developers. “The worst hit were the deals involving heavy transactions. One of my clients wishes to sell a plot in Kankerbagh worth Rs 3 crore, but there are no takers even as he is ready to cut the price by up to 30%,” says Sachin Chandra, honorary secretary of the Confederation of Real Estate Developers’ Associations of India.
According to Sachin, it’s like a double whammy for the real estate sector in Bihar. As it is, new projects were not being approved by the state agencies from 2012. Even before the realtors could feel any relief owing to the implementation of Bihar Building Byelaws-2014, came the note ban. The RERA and GST followed, making the buyers further jittery.
“Many have just postponed their plan to make investments in real estate for a year or two,” Sachin says.
The trouble for the realty market in Bihar came in the form of delay in final approval of building bylaws, master plan and the corresponding delay in approval of building construction maps. The building bylaws were approved in 2014 and the master plan in October last year.
Officials at the registry office at Patna say the registration of properties, including land and apartment flats, dropped by around 25 to 30% in the the first couple of months following notebandi. “The situation improved later,” said one official on Tuesday, a day before the note ban anniversary.
Developers, however, say registration of properties cannot be a yardstick to measure the impact of demonetization. “Property registration data is leargely dependent on white money, and it also includes deals related to small plots and even rural land which do not form part of real estate sector. As per our observation, the overall demand as well as inquiries have fallen down drastically following demonetisation,” said Mani Kant, former vice-president of Builders Association of India.