The Indian real estate sector is the second largest employer after agriculture in India. The strength of the Indian real estate market can be attested from the fact that it is expected to touch US $180 billion by 2020 (IBEF, 2015). At the moment, Mumbai, Bengaluru and Delhi-National Capital Region (NCR) are considered as the areas that real estate is showing marked development. Having said that, the ruling Indian Government is trying to expand this sector from these major cities across the country to the extent of encompassing the rural regions. The influx in urban areas has been vehemently increasing in India and the UN admittedly expects more than 404 million Indians living in urban areas by 2050 (Chambers, 2015). Such influx will not only promote space and pollution issues but will also pose job predicament and abandonment of rural areas for cities.
In order to avoid such doom and to allow millions of Indians realize their dreams, the government is taking many initiatives which are also becoming a part of the current government’s e-governance system in India. From the beginning, Prime Minister Narendra Modi aimed for developing the real estate sector of India for its economic importance through the ‘Smart Cities’ projects, ‘Interest rate system’ and the ‘Real Estate Investment Trust’ (REID) system. Through the ‘Smart Cities’, the Modi Government approved building of 100 smart cities and allocated Rs. 48,000 crore for this project (Singh, 2015). Secondly, for the development of real estate, the government engaged in two policy rate cuts of 25 basis points (by the Reserve Bank of India) and also engaged in additional tax deduction on Rs. 50,000 on the interest component of home loans. Finally, the Government approved the setting up of Real Estate Investment Trusts in order to allow foreign funds to get invested in the REITs. Over the past one year, 100% REITS for commercial real estate with lesser corporate taxes in India have also allowed real estate to develop at a faster pace as compared to the past many years. This brings the realization of real estate in rural areas stronger than it has been envisaged by the people.
“Digital India” campaign
The most tantalizing vision so far for Indian real estate that will revolutionize the sector allowing the sluggish demand to wake up from its slumber is Narendra Modi’s vision of “Digital India” (Table I), which aims to digitally connect all Indian states and society and empower people through ‘knowledge economy’. Through his ‘digital vision’ for India, Modi has posed serious question as to why ‘Google’ cannot be made in India, if Indians continue to work for Google (Economic Times, 2015). In simple words, the Prime Minister meant to postulate the Information Technology potential that the Indians harbour and which can be harnessed for further development when the right guidance, motivation and opportunity is given. The world recognizes the IT talent of the Indians and by following the vision envisaged by the Prime Minister, the poor and the rural areas can also be reached and can be connected to his ideologies. This initiative foresees an investment of Rs. 4.5 lakh crore to generate employment for 18 lakh people. It will help rural citizens get government services digitally on demand, e-healthcare solutions, e-education and provide digital connectivity to every citizen in India over the next decade.
Modi’s ‘Digital India’ has the power to revolutionize and transform India towards empowerment through knowledge economy and improve the standard of living for the millions of people inhabiting the country, especially in the rural zone.
Recreating rural India
With the vision for ‘digitized India’ rural areas can become the smart and new small cities. This will check the inflow of migration and bring development in rural areas. This also means that the value of real estate in the rural areas will increase. Connectivity will bring the increment in productivity, speed up processes and improve the quality of people’s work and services, allowing developers, brokers and customers to look forward for real estate in rural areas and this will impact the prices. The ‘digital vision’ of the Prime Minister can thus be attested as laying the groundwork in transforming the rural areas. The vision along with the right technological investment will allow the people from rural areas to transform their lives by encouraging startups in rural areas which will create jobs and transform the value of the real estate.
The Government is also planning to come up with strategies to control the influx of ‘Black Money’ in the real estate sector. One of the famous revamped versions of doing away with black money is the system of redressing the Benami (anonymous) transactions (Mahrotri, 2015). The Benami transactions to hide the identity of the true buyer and seller to evade tax or not to come under the scrutiny of Indian tax authority, will be much easier in rural areas and development of real estate will achieve quality monitoring and gain more customers. Along with digitisation, these real estate actions have the capacity to transform the rural settings of India forever. The sluggish demand of real estate growth in rural areas will thus slowly wake up and real estate developers will be encouraged to invest, build, transform and raise the value of real estate in rural areas of India. Such financial encouragement along with the recent Modi vision will not only envisage the growth of real estate in rural areas possible, but also make India to realize the dream of setting up smart cities. In congruence with such plans, from Fiscal Year 2008-20, the real estate market is expected to increase at the Compound Annual Growth Rate (CAGR) of 11.2% all across the country (IBEF, 2015). The following table (I) shows the expected statistical growth rate of real estate in India:
Better days ahead
Since housing market with credit system is also available from the dawn of the millennium, many people are rushing to invest in the real estate, pushing up land prices in urban areas. In addition to this, land, flats and houses are also very expensive in various Indian states making middle class Indians unable to afford housing in cities and such situations are encouraging people to look forward for real estate in rural areas. Modi’s vision is a spark to the real estate sector’s massive expansion in rural areas. The fact that Information Technology has become an important part of empowering people and improving the quality of lives in India is making ‘real estate’ development to turn into ‘reality’. Integrating technology and digitization will allow rural areas to grow and encourage people not to migrate to cities but remain in developing rural areas. The socially unprivileged including women will become empowered through digitization and development of real estate in rural areas will only bring the Indian social unit closer towards development.
- Chambers, J. (2015, June). Investments in technology crucial for Digital India dream. Hindustan Times. New Delhi.
- Economic Times. (2015, July). PM Modi launches Digital India campaign; asks why can’t Google be made in India – timesofindia-economictimes. The Economic Times. New Delhi.
- IBEF. (2015, February). Real Estate Industry in India, Market. Indian Brand Equity Foundation.
- Mahrotri, P. T. (2015, March). Modi’s “Black Money” Crusade Looms Over Property Bubble -. Bloomberg Business.
- Singh, S. K. (2015, May). Revival, a distant reality. The Indian Express. New Delhi.