A Capital idea

The Sheila Dikshit government has just taken a step that will not only clean up property transactions in the Capital but also do more to enh...

The Sheila Dikshit government has just taken a step that will not only clean up property transactions in the Capital but also do more to enhance the status of women than reservations in Parliament could.

The considerable reduction in stamp duties 8212; from 13 per cent to 8 per cent 8212; will significantly tamp down the presence of black money in the property business and encourage more transparent property transactions. This, along with freedom to convert leasehold to freehold for residential as well as industrial, commercial and mixed land properties8212;as announced by the Union urban development ministry8212;would together make it not only cheaper but easier to buy property in the Capital.

Earlier, the high stamp duty worked as a disincentive for people scouting for real estate in Delhi and provided a fillip for unscrupulous dealers who traded in black money. But what is even more commendable is the differential rate of stamp duty for male and female property owners in the new regime. The very fact that stamp duty for the latter now stands at 6 per cent would encourage many families to register their new properties in the names of female members.

As many economists have argued, protecting a woman8217;s right to own property is a crucial step in empowering her socially. So this is a step that other state governments must seriously consider and emulate.

With elections to the Delhi assembly round the corner, there is no denying that the latest announcements are politically motivated. But, even as we say this, it is very heartening to perceive that competition among political parties to win the hearts and minds of voters can also help citizens. There could be several positive externalities to this. A boom in demand for real estate could see the state government getting richer and business moving from Delhi8217;s satellite towns back to the Capital. This would have a cascading effect.

If business were to return to Delhi from Gurgaon, for instance, the Haryana government could reciprocate and reduce its stamp duties as well in order to retain business.

There is, however, the need for a word of caution and this pertains to the negative externalities. The rise in demand for real estate could well firm up property prices and even encourage buildings that violate construction by-laws on a very large scale. Resources of the already over-populated Capital would then be stretched to a point of total breakdown. And with corruption rampant within the administration, it is not difficult to imagine the government turning a blind eye to this. Such a development will have to be avoided at all costs.

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The new policy must not be allowed to adversely undermine the norms governing a human-centric urban development.