Sunday, October 30, 2016

Ease Of Doing Business & Real Estate!

“When I was growing up, we used to play basketball in a park that was never shoveled when it snowed. The basketball rims were never fixed. And we understood then that there was a relationship between public policy and our quality of life!”… DeForest Soaries

Reverend DeForest Blake "Buster" Soaries, Jr. is an African-American Baptist minister, author and public advocate; from Montclair, New Jersey as well he is former Secretary of State of New Jersey too! Yes the above quote might look odd for our topic but when I read the news about “Ease of Doing Business” in our beloved country, I couldn’t found better option! The news was about rating by World Bank on scale of “Ease of Doing Business’ in different countries; in simple words it’s about how easy it is for setting up or running any type of business in our country. And India as they have rated stood 130th in some 187 countries, definitely not a thing of which we should be proud! Some solace is in 2014 our ranking was 142nd which we rise to 131st in 2016 but the forecast by World Bank for 2017 is we are now 130th, just one position up! To add salt on our wound even one another survey was about utilizing youth’s strength & there also we rank too low; where as our neighboring countries like Sri Lanka & Bangladesh also are way up of us!

Many will say what’s news in this as most know that in this country only two kind of people can do business peacefully; one who are super rich & can bend the law or get the govt policies as per their needs & second is those who care a hang for any law or policies! Rest all who goes for asking any clearances or obey the laws, keep making rounds of various tables in numbers of govt offices & give up the idea of becoming business-man, is a bitter fact. 

As in this country the most difficult thing is start your own business & run it, may it be a soft-ware company or a wada pav joint, entrepreneurs are the last thing this country can develop! Many won’t be agreeing with me because are there not big business houses here or so many people doing business here, are they fools? These questions certainly will be asked & yes they have potential in it! But I am sure I am not alone with such opinion about “Ease of Doing Business, let’s make a short form as EODB” as millions of Indian’s who makes long queues’ for govt jobs may it be of a peon (chaprasi), forgetting their education qualification or joins processions for getting reservations in govt service will vouch how World Bank is right about EODB here! As nobody believes in doing business but get a secured job in govt even that of chaprasi would do! Even all those big business houses also share the same opinion only they won’t admit it in open as lots of stakes are involved & no big business-man can remain big by rubbing the rulers on wrong side is a naked truth! And speaking against EODB means indirectly speaking against the ruling party or the govt itself! But ask any chay-wala on road, who also is a respectable businessman in his capacity & he will tell you the truth! If you go for asking permission for tea stall, then right from obtaining PMC license to FDA acts, so many things come across but if you pay to local leader or elected member along with concerned officer then that’s all you need to become a street vendor & its lot easier way! Same is the situation may it be a big factory, though I don’t say there should not be any rules but if you make rules or policies which nobody can follow & yet you expect people to follow them then that’s end of EODB & which is what exactly happening here!

Interestingly as per World Bank when we are at position of 130th in EODB amonsgst some 187 countries, the industry-wise scene says we are 185th in real estate or say building industry! And on other side builders or real estaters or developers, call them anything are supposed to be master in law breaking, at-least media as well common man feels in that way! So is it that the policies in real estate are such (this also the World Bank report mentions) that obtaining any permission & following the conditions along, takes so much time & there are numbers of them, that the developer prefers to break the law than following it?  For two reasons I don’t blame officers or the govt people who are supposed to implement the laws & procedures; one I can’t afford to do that being in same business & second these are front men & they are supposed to just follow what’s been written in law books! The real master minds or culprits are unseen & they are the ones who can make the right policies but doesn’t make it for obvious reasons! It’s these people who are power house of any govt, who either don’t have capacity to make right policies or just don’t care about making it or else this scene wouldn’t have been there around. For e.g. delay in making development plans of the city or may it be decision of merging villages in PMC or making two separate development plans for one city i.e. new limit & old limit! All such things makes mess of the policies & create more obstacles for getting clearances, even a new entrant in real estate can understand it but the veterans sitting for years in those chairs are clueless towards these facts, why I should believe it? Here the sanctioning authorities like PMC or PMRDA or PCMC collects millions of rupees in name of various premiums or so called development charges but puts conditions on sanction plans that the said body won’t be responsible for anything right from water supply to drainage lines to access road making & what not! And yet this joke is happens only that still the developer accepts all these conditions & pays the money to the local body & completes the building & takes on the customers head on as they are aware enough & demand to pay even their domestic water bills from the developer! No sane person sitting in power house intervenes & at-least makes correction to those conditions on sanctions that whoever is using or availing the services he only should pay for the same! As not being able to provide the water or drainage to all parts of the city I can understand but then why the property tax bills are issued to the said residents when local body isn’t providing any service to them? At the same time how & why the builder should pay for the water bills when he has completed the building & done every possible duty he has towards the said building?

Similar is issue about road making, on one side local bodies are making expenses on so many non-essential fronts like some Social gatherings or Sports events like Kabaddi or Wrestling! Whereas on other side we read the news that a school in western suburb got the access road done by contribution of parents of the school kids as PMC doesn’t have funds provision for making of the said road! Means we can neither provide good schools nor the roads to the existing schools, what kind of smart city we are & how we expect to businesses to grow here without any provision for infrastructure? Another joke is we have policy of giving higher TDR or FSI on wider roads but road widening responsibility the said sanctioning authority doesn’t accepts, then what’s use of the policy for giving more FSI on wider roads? How some individual developer who is a business man also, is going to make a public road & why he should do it? Nobody asks such questions here as all know that nobody cares to answer them! Here if you have a God-Father behind you, then you can dig any road at your will & wish for any reason, even for putting up a illegal pedal (mandap) on road itself; but if you apply to dig some road for water connection as your building is complete then in monsoon you won’t get permission for four months as roads are not supposed to be dug in this period. And in summer as a policy decision you won’t get water connection as low storage in dams; so if you are unlucky & you have finished your building work at the start of summer then all you can do is wait for PMC water connection till eight months i.e. winter arrives & pray to the god that water connection gets released with good rains & dams full! And remember, for eight months it’s your job to supply the water to the residents at your cost; btw don’t ask me what you do with your drainage connection if road digging isn’t allowed! Can anybody imagine that in real estate where we need to dig earth for the foundation of the building, we are required to take NOC for Mining & Minerals’ & pay premiums for that! I wonder what kind of people we have as our rulers who can think foundation excavation comes under mining! Obviously one more NOC means one more opening for earning to many, so instead reducing NOC’s, everyone wants to increase them so all can have share in the income but in the process the principle source of earning is getting dried up is what we are forgetting!

Same way here policies can change in mid way of your construction as they are not decided in local body & never in tune with facts. Someone sitting up above in the govt thinks from today TDR norms needs to be changed then he does so & our local people are very fast in obeying any such new policy. So if you have started your project with some assumptions of then present policy, be prepared right from road width to relaxation in height any policy can become past, making your project also a history! It’s here only it’s possible that one department gives you exemption from considering parking height in total height of building but at the same time fire dept says they will consider the said parking in total height, making you wonder have you make any crime in becoming a law abiding builder! And on top of it when after taking all the pains of obtaining every NOC & completing your project, you read the news in  media that all other illegal structures which has been built without any sanction are regularized by the govt! And all above examples are just tip of iceberg as in one real estate industry only you can get such thousands of examples of clashes of policies making impossible to do the business & we are speaking about entire business fraternity right from automobile to small shops, so imagine what we are fighting with!

In 70’s there was said to be “License Raj”, means to start any business you have to get some license & for that you have to visit Delhi bosses & that’s it. But today it’s not just getting license but even doing business with that license has become impossible & the so called bosses are all over right from Delhi to in the ward of your own city. The solution is not that difficult, all what required is having right people in right position that can understand the nature of business & come out with right policies. Form a task force at every level & make them interact with people in various businesses & with open mind, to understand what a business really needs for survival! Right from tax policies to locate the hurdles in obtaining various permission to pin point obstacles in operating the business, everything is needed to be reformed! Age old laws related to environment protection or labor welfare, wipe them out & formulate new laws. I repeat, no one will say we don’t want to protect environment or doesn’t care for labors but a balance has to be strike if we want a business to survive. Most of the laws at-least those governing real estate has been made considering the developers are criminal & not going to follow them! Remember any wrong policy not only kills the business but as the businessman has invested his life time earnings, to save that he takes refuge of wrong ways which we call bribing, in the end damaging entire society! And it comes in all forms as right from the system which allows doing wrong things to giving hafta to local leaders, everyone wants their cut in the business! No, I am not defending bribing & businessmen’s attitude, agreed there are good people in system but most of the time they are helpless due to wrong policies is a fact! I am just sharing what’s happening around us which we know but refuse to acknowledge! No sane businessman will like to do something which the law doesn’t permits & live with that tension if not guilt. But if someone throws you in the tank of liquid oxygen, then what you can do than paying the person to pull you out of that tank?

Here I will share my own experience regarding EODB, though I am having a business of my own & that too of real estate! I have a small piece of land in green belt in Pune city right in the city center. Yes there are few green belts which are yet in existence in Pune city; so this piece is some 2000sq m & by present norms nothing is allowed to build on this piece because by present development rules if I have to get any structure sanctioned on this green belt then the plot size must be more than 4000sq m. And yet whatever agriculture base things are allowed like cattle shed or something which I need to build even to guard my piece of land, I have been asked every NOC right from Irrigation dept as its nearby to river to a fresh demarcation from city survey as my present one is four years old. Now when I asked for new demarcation, the said dept says its old record so I will have to pay fees for entire eleven hector of land of which my 2000sq m is part of & they will issue notices to all the occupants, so you can imagine what will be outcome. And this all circus for getting some structure sanctioned which has no commercial value; as I am not asking for some restaurant or marriage hall type purpose! But at the same time every land along the road in the said green belt of which my land is part, has come up with every possible commercial use right from garage to restaurant to logistics shades & what not! Now you will ask how this is possible. Because those land owners didn’t ask for any permission & just started utilizing their land for the purpose they want! Every day I walk from that road & look at my vacant piece of land & at restaurants, marriage halls in the neighborhood & think why can’t I do something like these guys are doing? Simple, because I am a respectable law abiding person, how can I do something illegal? Is what I tell to myself but in nutshell I am a coward who is afraid to break the law & I keep on waiting for the new policies by which I will be able to have some commercial use sanctioned in my size plots as well keep chasing the city survey office for demarcation certificate! And I really can’t blame the neighbors which includes even smaller size plots than mine i.e. of 500 sq m & that’s all they have got! By grace of god I am not depending for my day to day living on my land in green belt but what a person whose only asset is a piece of land below 4000sq m in the green belt should do? I remember famous dialogue by great villain Ajit in some 80’s movie, “Ise liquid oxygen me daal do, liquid ise jine nahi dega aur oxygen ise marne nahi dega”, he orders to his aide! Same is situation here as you have a land holding right in city center so you are not poor but the govt neither take away that land for the purpose of reservation with compensation nor would allow you anything to build on the said land!

In my sharing’s I never give my own example but this is something which is close to our subject & I am witnessing by myself the so called “Ease of Doing Business’, so I thought of using my own experience here. As simple things like the policies related to land use which are basic need for any business, if we can’t make right then how we are expecting the businesses culture to survive here?

The entire scene of Business, especially for the mid-segment entrepreneurs in our country reminds me a joke, “A man in tie & smart dress, hops in a running train & while he was just taking sigh of catching the train, the TC asks for his ticket/reservation. On which the man apologies saying he got late & queue at ticket window was very long so he jumped in & he is ready to pay the fine but he need to reach the destination. The TC says no, he can’t travel on this train without reservation & he will have to be deported at next station that too after paying fine. In the mean time the man’s eyes fall on a beggar who is comfortably sleeping in the passage of the train coach; so angrily he asks the TC, well how he can travel without reservation on this train? The TC calmly replies, you also can wear clothes like him & sleep besides him, and then I won’t bother you too!

I think the joke represents today’s business scene in our country, the well dressed man is the entrepreneur, the beggar represents illegal traders, the TC is govt system & the train is our country! If our govt is really keen about improving the ranking in EODB then the rulers need to introspect seriously & fast or else one day the train will have only beggars as no traveler will be in position to board the train with proper ticket!

Sanjay Deshpande 

Sanjay Deshpande 

Sanjeevani Dev.

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