Approvals for land and building across states are not uniform. Moreover, they are contradictory in some places and differ in order of importance. The Indian Express uses a recent study by the Planning Commission to examine the differences and how they affect investors.
For an investor, the key regulatory framework that bears the greatest significance is the time taken to get land and building approvals in place. The investor needs to plan finances and prepare for contingencies that could come in the way of effective project implementation. This impacts almost all industrial activity and more so real estate development. The World Bank has also devoted a lot of attention to the processes in this space while ranking countries on the ease of doing business.
The Planning Commission has recently carried out a survey across all states on the business regulatory environment and impediments faced. This survey was commissioned to the accounting firm Deloitte, whose report has been seen by The Indian Express. One of the main factors identified by the Plan panel is the land and building approval mechanism across states, which has a huge role to play in the perception of the business environment in that state as being conducive or not.
The two key parameters that were surveyed were: time taken for conversion of land use, and time taken for building approvals. When compared across key real estate markets in the country, two states Madhya Pradesh and Andhra Pradesh stand out for the progress they have made in cutting red tape. In Madhya Pradesh, conversion of land use takes around 45 days while building plans get approval in 34 days on an average. The report has surveyed the processes in getting industrial activity started, so that timeline might not be exactly the same for a real estate project, but throws some light on the efficiency of the approving authority.
The accompanying table shows the picture across several states. In the key real estate market of Haryana, conversion of agricultural land takes as long as eight months, while in Maharashtra that could stretch to one year. That process could shorten if development is carried out in lands demarcated by the authority for that purpose such as industrial townships or lands sold by the urban development authority. The other laggard state is Punjab, where survey respondents say that in many cases due procedure is seldom followed. In the other states that have seen substantial real estate activity — Uttar Pradesh, Karnataka, Tamil Nadu, West Bengal — the time taken could range from 4-6 months. Rajasthan is longer at 195 days while Kerala scores remarkably well on this score at 65 days and Gujarat at 100 days.
Even as some of these states paint a picture of progress in streamlining procedures, they are by no means complete for there are several serious lacunae that still persist.
“Andhra Pradesh has adopted the best practices in its registration departments, while Delhi, the national capital ranks among the worst,” says Shyam Sunder, a Chennai-based advocate who has recently released …continued »