Monday 7 July 2014

FOREIGN DIRECT INVESTMENT IN URBAN INFRASTRUCTURE DEVELOPMENT

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Real estate business in India has by and large remained in the unrecognized sector and thereby, has attracted little corporate funding.Few efforts have been made to streamline the sector and its financial environment.One of the most recent developments however appears to be a major shot in the arm for the real estate sector. The decision of the Government of India to permit foreign direct investment (FDI) has been viewed by many as the much needed prescription to bring about a competitive environment in the sector, thereby forcing smaller and unrecognized players to move out and make way for more professionally and globally sound players.

Although it has a long time for the government to carry out the unbundling process with some degree of success, it has not been a mean achievement. The reasons for this have been continued liberalization, rising of FDI cap in various sectors telecom reforms and foreign companies being permitted to buyout Indian partners.

FDI in real estate in Indian cities may be viewed in terms of its overall strengths, weakneses, opportunities and threats. In terms of strengths, one of the major benefits, which FDI is slated to bring about, is influx of huge capital. This will of course happen only if we ensure investments by the foreign investor are free from hassles. It is still a general perception that the real estate sector in India is not the right place to park funds.

The real estate industry in India has a very poor image in the global scenario. The government of India has proactively recognized that FDI policy has great strength to rake in a lot of money. We earnestly feel that the current industry has certainly matured in terms of quality and design and foreign entry would certainly improve the product. Improved, cheap and maintenance free technology is another strength which can be brought in by foreign companies. 

On the whole, greater professionalism would certainly be induced into the real estate industry. The FDI has resulted in competition and fall in prices in telecommunication, electronics and automobiles sectors and the consumers have been immensely benefited, however the same has also to be realized in the real estate sector. The real estate providers both private and public have to strike a balance so that all the sections of the society are benefited.

The following can be considered as goals for sustainable development of urban infrastructure: 
1. Supporting urban reforms, industrialization, productivity growth, expansion of financial and other services, and promoting economic activity in both formal and informal sectors. 

2. Coverage of urban infra-structure facilities, water supply, sewerage and drainage solid waste management, transport, health care, education, etc.

3. Creating an enabling legal, planning, financing regulatory framework for the sustainable augmentation of housing, infrastructure and social amenities.

4. Facilitating commercialization of urban infrastructure and alternate forms of service provision, including privatization and public private partnerships.

5. Assisting the urban poor in income generation activities, improving their quality of their physical environment and enhancing their access to basic services like safe drinking water and sanitation, primary health care and education.

6. Protecting the urban environment and ensuring harmonious development of rural and urban areas with due regard to the conservation of natural resources.

7. Installing and sustaining people-friendly and transparent and accountable urban governance based on empowered elected local bodies, committed political leadership, partnerships with civil society, participatory planning, capacity building of stake holders, etc.

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