The blessing and curse of real estate boom

The impending demolition of four high-rise buildings with a few hundred posh apartments in the Kerala city of Kochi has brought to the fore the issue of unregulated urban growth across India. In the wake of globalisation, the country has been witnessing explosive growth of its centuries-old metropolitan cities and emergence of new urban conglomerates in many states.

A century ago, as he emerged as the tallest leader of the freedom movement, Gandhi said, “India lives in the villages.” He constantly drew attention to the plight of the villagers. He discarded western clothes and wore loincloth to identify himself with them.

The 2001 census, the first of this century, showed India was still predominantly rural with 74 per cent of the people living in more than 600,000 villages. At the next census in 2011, India was still rural, but the village population had come down to 69 per cent. Since then the pace of urbanisation has accelerated with the Central and state governments aiding the process.

In 2015 the Centre announced a plan to build 100 “smart” cities in different states. Since it has provided little information on the progress of the project, it is not clear how many are taking shape and how smart they are.

According to current official projections, the urban population will not exceed the rural population until 2050. However, the next census, due in 2021, may find many small states more urban than rural.

The old cities have suffered enormously due to failure of the authorities to manage the problems of growth.  The new ones are grappling with problems like pollution and poor infrastructure. From the 1970’s, the Centre enacted a series of laws to protect the environment and ensure that air and water are clean. Most states have been tardy in implementing them.

The construction industry expanded rapidly as the breakup of joint families, increasing household income and aspirations of the rising middle class raised the demand for houses. In areas where there was scarcity of land, high-rise buildings started coming up.

In 1994 the Centre made environmental impact assessment and environmental clearance for projects compulsory.

In 2006, the Manmohan Singh government exempted township and area development projects covering less than 500,000 square metres from environmental impact assessment and construction projects of less than 20,000 square metres from environmental clearance.

To speed up economic development, the Narendra Modi government diluted environment regulations further. This, coupled with corruption at the political and official levels, made it possible for unethical businessmen to flout laws with impunity.

The modus operandi of colluding politicians and officials is to grant clearance for a project and issue notices later calling attention to violations of the law. The issue is then taken to the court where it remains long enough for the builders to complete the projects, taking advantage of the absence of orders staying the construction.

In Delhi, Mumbai, Chennai and other cities, many constructions were found to be in violation of the law but the authorities allowed the irregularities to be compounded on payment of a fee. Quite often the hardship that innocent flat buyers will suffer is cited to justify the lenient attitude towards offenders.

In one Kerala case, the high court, while holding the construction violated the coastal zone management regulations, let the building stay, saying demolition may pose an even greater danger to the environment.  The Supreme Court upheld the decision.

However, when an identical case from Kerala reached the apex court later, it ordered demolition of the illegal constructions in which some 400 families had bought apartments.

The state government and the apartment owners sought review of the decision but the court remained firm. Observations by the judges during the hearing indicated that their tough stand was based on the assertion by experts that the severe floods that hit Kerala and other states in recent years were a direct consequence of illegal constructions in environmentally sensitive areas.     

 A property brokerage firm which conducted a survey in nine cities found more than 400,000 flats in the “affordable segment” lying unsold. But, with the economy in the doldrums, the government believes it cannot afford to let the real estate sector slacken.

Its market size was $ 120 billion in 2017. Industry spokesmen are looking forward to a new boom.

Builders are reluctant to adopt green technology. Unless the government ensures that the growth target is achieved respecting the laws, the blessing of urban living will come with the curse of environmental degradation.