How Karnataka's Single-Window System To Approve Building Plans Could Be Beneficial

Indian real estate developers have a difficult row when developing a project. They usually have to submit too many applications and approach dozens of government agencies to get their project off the ground. The process of approvals is long that raises the cost of housing because uncertainty can prevent homebuyers and real estate developers from doing many things they otherwise would have done. This also makes the process more corrupt. When there is so much at stake, some officials exercise their whims or demand large amounts of money as bribe, too. This is not an exaggeration. Almost a year ago, a well-known developer in Thane killed himself because he found the process too stressful.

Real estate developers have long been arguing that we need a single-window clearance system for residential and commercial projects. Niranjan Hiranandani recently said that though Prime Minister Narendra Modi and Maharashtra Chief Minister Devendra Fadnavis have been doing much to make doing business easier, the benefits have not seeped down to ordinary people because real estate developers do not get approvals on time. The regulatory framework makes it difficult and costly for real estate developers to undertake and execute projects on time, and such costs are eventually passed on to home buyers. Even though state and central governments have been taking steps to make such processes easier, homebuyers and developers are yet to benefit from this.

Karnataka, however, may soon have a single-window clearance system, that too specifically for middle-class home buyers, if the state government is able to outsource the process to a professional panel of engineers. The government has proposed a single-window system, and an online service to clear applications for middle-class homebuyers. If this materialises, a panel of engineers will approve building plans of houses that are 30ft*40ft or less. The panel is not likely to take more than a week to approve building plans. The government wants to make the approval process for small buildings units easier, and, in the long run, make the process faster for high-rise buildings, too. Currently, building plans are sent to the Bruhat Bengaluru Mahanagara Palike (BBMP), to be approved by a Plan Approval Committee (PAC).

This leads to red tape, corruption and delays. According to some sources, hundreds of such applications have been lying before the BBMP, waiting for approval. Moreover, it is also difficult to predict how government policies may change, because the process is long and complex. This hampers the process of business calculation. When it is difficult to predict the future, it is difficult to do anything.

According to the recent data we have, some cities in Karnataka like Bengaluru are good at approving building plans, when compared to other Indian cities. In 2009, according to World Bank, Karnataka's rank was 13, among 17 Indian states surveyed, in ease of doing business. But Karnataka's rank was 1 in dealing with construction permits. This will improve if a single-window system comes into being.

Some, however, feel that the possibility of the panel of engineers misusing their privileges is high, too. This may as well be true. But this does not change the fact that it is important for developers and homebuyers to get approvals as quickly as possible. When the process of verification itself delays construction of the project, developers and homebuyers are forced to pay more towards interest. Holding a project is a costly affair. The transaction costs become higher too. Homebuyers do not get their homes delivered on time either.

Developers had earlier said that we need a single-window system in place before the real estate regulatory bill is implemented. Some developers even expect housing prices to fall by 15-20 per cent with a single-window clearance system. Even when urban local authorities and government agencies delay projects for many years, real estate developers do not have any way to have their concerns addressed. Homebuyers are also forced to pay more as interest for no fault of their own. This also makes banks, financial institutions and other lenders more hesitant to extend credit.