Update: Allowing Pakistan Minorities to Settle in India Will Boost Domestic Real Estate

Update as on August 20, 2016

After its earlier move to allow minority communities from Pakistan, Afghanistan and Bangladesh to buy properties in India, the Indian government has now taken more steps to provide them fair opportunities for a more comfortable living and hassle-free movement within the country. For this, the Union government has decided to extend the following additional facilities to Hindus, Sikhs, Buddhists, Jains, Parsis and Christians from those countries staying in India on long-term visas:

Permission to open bank account

Permission for purchase of property for self-occupation and suitable accommodation for carrying out self-employment

Permission to take self-employment

Issuance of driving licence, PAN card and Aadhaar numbers20

Allowing free movement within the state/UT where they are staying

Transfer of long-term visa (LTV) papers from one state to another

Reduction of penalty amount to Rs 100, Rs 200 and Rs 500 from $30, $130, $230 on non-extension of short-term visas

Permission to apply for LTV from the place of present residence when the applicants change place without permission

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Ever since it took charge at the Centre in May 2014, the Narendra Modi-led government has taken several measures to settle the refugees from Bangladesh and Pakistan, living in India on temporary visas, in a better way. But the government's recent move to allow people from Pakistan's minority communities to buy properties in India is certainly the pièce de résistance.

Across Indian cities like Delhi, Mumbai, Nagpur, Pune, Indore, Bhopal, Raipur, Jaipur, Jodhpur, Jaisalmer, Ahmedabad, Rajkot, Kutch and Lucknow, there are about 400 Pakistani Hindu refugee settlements.

These people — mostly Hindus and Sikhs — would also be allowed to get identification documents, such as Aadhaar and PAN, to be able to open bank accounts in the country without prior approval from the Reserve Bank of India. And, that's not all. These people will also have the freedom to move around in the country, irrespective of any past delays on their visa extension. The Centre has also decided to substantially reduce the citizenship registration fee, from Rs 15,000 to as low as Rs 100.

In November 2014, the Modi-led government had decided to manually accept citizenship applications from minorities in Pakistan. This was among the many measures it had taken at the time to settle the refugees from that country in India. To simplify the process further, the Union home ministry had in April last year rolled out an online system for the various government agencies to process long-term visa (LTV) applications. Going a step further, the government had in September decided to get even more “humanitarian” by allowing refugees from Bangladesh and Pakistan to stay here even with expired visas.

PropGuide takes a look at how the present move will impact real estate in India:

A clearer picture of immigrant population: There is no official data to show the number of refugees residing in the country at any given time. That also applies to the number of dwelling units occupied by them. When the present move is enforced, the government will have a clear account of this population and the real estate they occupy.

Demand boost: By allowing people from Pakistan's minority communities staying here to buy properties, the government might trigger fresh demand in India's real estate sector. So far, this population has largely been concentrated in states like Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Uttar Pradesh and the Union Territory of Delhi. But since these people are proposed to be allowed movement across the country without restrictions, several other states might also see real estate growth.

Registration boost: The steep proposed cut in the citizenship registration fee will encourage people to apply in huge numbers. The high fee involved in the process had been a one of the hindrances in people coming forward to claim citizenship.

Liquidity boost: When this population, fairly big in number, is allowed to open bank accounts in the country, it will lead to greater liquidity in the system. In the process, that will further boost demand for real estate, apart from other sectors.

Business boost: Starting a business and availing of loans to fund it are subject to the availability of requisite documents. When this new population, armed with citizenship and identification documents, enters the country's many markets, it will increase fresh business activity. That will increase income levels, triggering a fresh demand for housing.