‘Cussedness’ of state, local authorities single roadblock in housing sector, says Deepak Parekh

Advocating a ‘carrot-and-stick’ approach, eminent banker Deepak Parekh has said the “cussedness” of state and local authorities is the single roadblock in the housing sector and the Centre should incentivise the states granting fast-track approvals and penalise those not falling in line.

Parekh has also favoured housing finance companies being permitted to fund developers to purchase land for affordable housing. In his annual letter to investors, the chairman of housing finance firm HDFC Ltd said there is a need for greater transparency in building approvals as the home buyer is hurt the most on all counts.

“Price escalations due to delays and payment of speed money for building approvals are ultimately costs borne by the home buyer,” he said. “The single roadblock in the housing sector today is the cussedness of state governments and local level authorities in embracing a transparent and streamlined process for building approvals,” he said.

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In so many ways, he said, the government has been ahead of the curve in adopting digitisation to make processes more efficient. “Yet, one fails to understand the reluctance to put in place an online, time-bound, single-window clearance mechanism for at least fast-tracking the numerous approvals required for affordable housing,” he added. He pointed that “many of long-term shareholders would have noticed that I keep raising the issue of the need for greater transparency in building approvals”.

Explaining the rationale, he said, “The reason I do so, is because it is the home buyer who is hurt the most. Price escalations due to delays and payment of speed money for building approvals are ultimately costs borne by the home buyer.” He emphasised that the clarion call from the highest authority in the country to “free the housing sector of corruption and middlemen” is significant.

“Perhaps the central government needs to implement a carrot-and-stick approach, which either incentivises state governments who fast-track approvals for affordable housing or penalises them for not falling in line,” he said. Quicker approvals shorten construction timelines and this will help reduce the overall cost for a home buyer, he added.