Reform in the Indian real estate sector: an analysis

Abstract

Purpose

This paper aims to discuss the essential features, merits and drawbacks of the recently enacted Indian Real Estate Act, 2016, an economic reform measure pertaining to the real estate sector (RES). This paper analyses the impact of the Act and Union Budget 2016 on the inflow of foreign d irect investment (FDI) in India, and examines its ramifications on the world economy.

Design/methodology/approach

The study is based on secondary data sources, including consumer forum reports, investigative reports from national agencies, court decisions, government websites, real estate companies and industry associations. A sample survey on the implications of the Act has been conducted using Facebook and and through personal interaction with various stakeholders.

Findings

The Indian RES was unregulated prior to the passage of the Act, which has several provisions aimed at protecting the interest of consumers by tightening fraudulent practices of promoters/developers. Stakeholders are hopeful, but there is some apprehension. The government’s budgetary and fiscal support for infrastructure development has had an impact on the FDI inflow.

Practical implications

The Act is new, so there is not enough data to judge its real impact on the economy. However, it has started showing evidence of impact through a recent judgment by the Supreme Court of India punishing a promoter.

Originality/value

Regulating the Indian RES is a challenging task, but the new regulations are likely to provide confidence to foreign investors who may see India as a safety net for investment. This paper is timely and may help move things in this direction.

Citation

, B.K., Chawla, N. and Mohanty, B. (2018), "Reform in the Indian real estate sector: an analysis", International Journal of Law and Management, Vol. 60 No. 1, pp. 55-68. https://doi.org/10.1108/IJLMA-10-2016-0093