New Delhi: Raising concern over high housing costs in the country, eminent banker Deepak Parekh today said developers need to shun 'speed money' and focus only on speed in delivering projects to the customers.
Parekh, the Chairman of the country's largest mortgage lender HDFC Ltd, also asked regulators to allow banks and housing finance companies to fund land transactions meant for residential purposes, while he sought immediate steps to fast-track numerous approvals required for such projects.
Praising the 'Housing for All' scheme, launched today by Prime Minister Narendra Modi, Parekh said that the housing sector needs to get its pricing points right and the focus of developers needs to shift from luxury to affordable housing.
"The path to any grand vision is rarely smooth, but some roadblocks can be overcome. One of my greatest concerns today is who will physically build in India on the scale required," Parekh said in his annual letter to shareholders.
Stating that 600 million Indians will be living in urban India by 2030, Parekh said the country will need to rejuvenate its existing urban areas and create new cities.
"It is the construction sector that has to deliver most of this," he said, while adding that the sector contributes 8 percent to India's GDP and constitutes 10 percent of the country's workforce, translating into 45 million jobs, created directly or indirectly by it.
"By 2022, the largest incremental growth in jobs is expected to come from this sector at an estimated 77 million new jobs. India needs growth, physical infrastructure and jobs -- all of which can be delivered by the construction sector, provided a conducing policy framework supports the sector.
"Many construction companies are hamstrung with over leveraged balance sheets, though this is only one aspect of the problem. For the construction sector to revive, there is an urgent need to reduce delays in claims settlement. Ironically, a majority of these claims are with government bodies," Parekh said.
He stressed on an urgent need for a "credible and efficient arbitration and dispute resolution mechanism to safeguard against lengthy litigation processes.
"Further, standardisation of contracts (which would also facilitate standardisation of taxation) and ensuring strict adherence to contractual terms will go a long way in boosting the sector.
"Where there is a will, there is affordable housing. The perennial question is how can housing be made more affordable," Parekh said, while adding that there was a disconnect in the housing market.
"On one hand there is an acute shortage of housing, but on the other, in some of the large cities, there is a growing stock of unsold inventory. The answer lies in the pricing points not being right. The real demand is in the affordable housing segment, not of high-end luxury housing.
"Developers are not relenting on the pricing of existing stock, while the cost of launching new projects is only rising," he said.
