Structural Reforms Haven't Been Tested Yet, Corruption Looms Large

Indians abroad or living in the country know how bright a deal it is to have a property here. Despite the slow pick-up in terms of sales, the return on investment in India has always been appreciable. However, United States-based risk management company, Kroll, says that corruption within the setups in India is a deterrent for many while they zero in on a property. Risks to the security of the assets is also another problem, says the survey.

In findings of the Transparency International Survey 69 per cent of respondents had to pay a bribe in India while officials ask for 'tea money'.

You would be wondering despite structural reforms that were introduced lately, why should the investment climate suffer? According to the report, investors are exercising caution just in case there is some retrospective action taken by the government with respect to tax. Investors are also holding back due to the climbing unemployment rate, the under-capitalised banking system as also politics which may turn out to be unfavourable for investors.

Consider this. According to the labour bureau statistics, job creation in 2015 and 2016 (April-December) stood at 1.55 lakh and 2.31 lakh, respectively, when more than 1.3 crore youth are job-ready every year. Moreover, layoffs in the name of poor performance and other reasons in even the big companies has led to uncertainty not just among the junior to mid-level employees but even the top management.

Speaking to PTI, Kroll's MD, Tarun Bhatia said, "As the current government got voted in and based on the promises made, global investors were expecting a material change in how business is done in India. Unfortunately, that hasn't happened to the extent anticipated. Multiple reforms have been introduced which signal the strong intent of the government. However, they haven't been tested yet,” and so, till the waters get tested, the investment would be slow.

Not just corporate investments, the end-user investments also suffer and these are some of the reasons that affect this. This also suggests that going online may be the only way out if corruption within the system has to be eradicated. With RERA, much of the information that must always have been out in public, is now out in the open for every homebuyer to weigh and decide. However, as Bhatia puts it, the reforms have not been tested and so it's too early to say.